West End, Hendersonville, Nolensville Pike dubbed ‘hottest submarkets’ of Nashville
The Vanderbilt, West End, Sylvan Park area has become Nashville‘s ‘hottest’ submarket, according to a July report from ApartmentData.com.
Rental rates have grown nearly nine percent in the west Nashville area over the last three months, with occupancy up 18%.
The ‘Hottest Submarkets’ measurement evaluates rental rate growth and the number of units absorbed over the past three months across the Greater Nashville areas’ 19 submarkets, spanning from Clarksville to Manchester.
The second and third ranking submarkets are the Hendersonville and Gallatin area, and Nolensville Pike.
The Hendersonville and Gallatin submarket saw nearly a six percent rental rate increase in the last three months and Nolensville Pike saw a similar increase.
Vice President of ApartmentData.com Cindi Reed said Nashville’s demand reflects a wave of growth across the South, most consistent with a city like Austin, Texas.
“Population growth from both coasts is putting a really high demand on the South,” Reed said. “It’s not just Nashville.”
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Rising rental costs
The average rent per month across the city’s 148,000 apartments is $1,594, according to the report. Last July, apartments across the area rented for an average of $1,387, while in July 2020, the average cost of an apartment was $1,237.
Over the last five years, rent growth jumped from four percent to 16%.
“We don’t see this rental growth slowing down,” Reed said. “We’re going to see more and more development in Nashville.”
The largest share of the city’s units are Class B apartments, relatively new buildings with fewer amenities and higher maintenance costs than Class A apartments, the newest and most upscale on the market. A Class C grading is awarded to units having been in the market for over a decade and Class D are the oldest and in most need of repair.
The Greater Nashville Area has seen a decline in the number of Class D units, or apartments renting around $1,000 a month.
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More than a third of the city’s nearly 9,400 units under construction are located in the Downtown, SoBro, Gulch, Central Nashville area and are likely to be Class A properties, with rents circling above $2,000.
There’s an established need to expand Nashville’s housing inventory as more people migrate to the area and housing costs continue to climb.
Rising rental costs are outpacing income growth, financially burdening renters nationwide.
In Nashville, wages have increased by just three percent as housing costs grew by 20% in the last year.
The Greater Nashville Area had just over 120,000 apartment units five years ago, and 90% of the units were occupied. The metropolitan is now inching toward 148,000 units, and 93% are occupied.
Nashville’s high occupancy rates, mingled with a pipeline full of proposed and under construction apartment buildings, indicate the city’s arduous demand for housing.
“If you build it, they’ll come,” Reed said. “But we just can’t build it quick enough.”
Arcelia Martin covers growth and development for the Tennessean, a part of The USA TODAY Network. Reach Arcelia at amartin1@gannett.com. Follow her on Twitter @arcelitamartin.