Bolstered by Strong Tech Industry Growth, Nashville Ranks Among Top 10 for Office Rent Growth Among CBRE’s Tech-30

08 Nov 2018

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Buoyed by double-digit tech-sector employment growth, Nashville saw office rents rise 12.3 percent between Q2 2016 and Q2 2018, according to CBRE’s annual Tech-30 report, which measures the tech industry’s impact on office rents in the 30 leading tech markets in the U.S. and Canada. The growth rate ranks Nashville’s office rent increase eighth fastest among the 30 markets measured. Furthermore, Nashville’s top tech submarket, Downtown, saw an 11.4 percent office rent increase, and the second highest net absorption (21.1 percent) among all top tech submarkets in the report, behind only Salt Lake City’s Tech Corridor.

“Nashville’s culture and low unemployment rate have been a driver for millennials flocking here, looking for innovative and growing companies with cool office spaces in urban areas. The city is attractive to tenants and offers a good combination of low office rents and a growing high-tech labor pool,” said Janelle Gallagher, senior associate at CBRE. “With the city’s high-tech services and software job growth rate at 12.3 percent, Nashville has great growth potential from an investor’s perspective.”

Impact of Tech Job Growth on Office Markets

The influence of tech job creation on office market growth is pervasive across the U.S. and Canada, with eight of the Tech-30 markets posting rent growth of 10 percent or more between Q2 2016 and Q2 2018. Office rents also increased in 26 of the 30 primary tech submarkets over the same period.

Nashville’s average office asking rent of $25.76 per sq. ft. presents a cost-saving advantage for both established tech companies and startups, which combined with a low cost of living and a highly-skilled workforce, makes the market an alternative to large coastal tech hubs. Construction in Nashville’s urban core is attributable to the demand for more space and the preferences of tech talent for properties with full amenity packages, abundant natural light and open layouts.

Top 10 Office Markets by Rent Growth

MARKET

RENT GROWTH RANK

RENT GROWTH RATE Q2’16- Q2’18

TECH JOB GROWTH RATE (% CHANGE ’16-17)

Atlanta

1

16.3%

10.7%

Los Angeles

2

15.8%

14.7%

Orange County

3

15.5%

14.5%

Seattle

4

13.9%

25.7%

Portland

5

13.8%

12.8%

Charlotte

6

13.7%

15.4%

Raleigh-Durham

7

12.8%

10.2%

Nashville

8

12.3%

12.3%

Denver

9

9.6%

12.5%

Washington, D.C.

9

9.6%

3.9%

 

“As space availability in top tech submarkets continues to tighten, we expect large tech companies to continue to expand outside their headquarters markets—including further into secondary and even tertiary markets. Large tech company expansion into smaller markets will help foster innovation clusters, further boosting job creation and creating additional office demand,” said Colin Yasukochi, director of research and analysis for CBRE in the San Francisco Bay Area.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.