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Commercial Real Estate Sales hit 12-Year low in Nashville

by Ohio Digital News

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The Music City’s commercial real estate scene was humming in 2022, but the song fell flat in 2023.

There were 424 closed commercial sales in Nashville last year, its lowest output since 2011, the Nashville Business Journal reported, citing Metro Research. 

Real estate investors have been flocking to Music City over the past decade, and 2022 set a record with nearly $6.5 billion in transactions. That number dropped by more than a half last year, with $2.8 billion in commercial sales. 

“When you’ve had a really good long bull run like we’ve had, where prices keep increasing, rents keep going up and, all of a sudden, you have a pretty rapid rise in rates — in order to make the same deal work today that you did two years ago, you can’t pay those same prices,” Stephen Prather, a broker with Charles Hawkins Company, told the outlet.

The last decade has been unique for Nashville, given its rapid population growth and influx of investment activity, he said. Thus, replicating the city’s recent success could be difficult to achieve. 

The drop in sales last year also reflects broader challenges facing commercial real estate, such as higher interest rates, a beleaguered office sector and wary lenders making it tough for would-be buyers to obtain adequate financing. 

“The worst periods are when you’re trying to figure out what’s going on,” Prather said. “Rates were going up for so long. I think we’re now in a period where we feel like rates are going down if they’re going anywhere.” 

Prather anticipates a bounce-back year now that the future of the market is clearer, citing a slight decline in interest rates. He’s also noticed an uptick in buying activity so far in 2024, with developers and investors “feeling better about the environment,” he told the outlet.

—Quinn Donoghue 

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