Nashville’s business community can puff its chest today: National real estate experts rank Music City as the second-best place to do development of anywhere in the country.
That’s one of a few shimmering upshots from a new real estate report by PricewaterhouseCoopers and the Urban Land Institute. They surveyed 1,800 developers, investors, property owners, brokerage firms, lenders and others, providing one of the most complete nationwide perspectives on the industry.
The report underscores, and helps explain, a dominant storyline in our region: the unending swarms of investors pouring into Nashville. They perceive a lot more profit and upside by committing their money here, as opposed to major markets such as San Francisco, New York City, Boston and Washington, D.C. — places that have become so valued globally that the cost of buying property is surging, squeezing the returns those investors could realize.
Put another way: Expect to see even more construction cranes popping up in the skyline.
“Tennessee’s state capital has been on the lips of interviewees the last two years as a potential up-and-coming market. Well, it looks like it has up and come,” the report declares. “This year, survey respondents have moved the market up significantly in terms of perceived attractiveness.”
Let’s break that down:
For the first time in the report’s 37-year history, Nashville cracked the top 10. Those top cities have a cost of living that’s 12 percent lower than the cities that ranked highest five years ago, the report says. Back then, Nashville wasn’t even in the top 20.
Here’s a quote from the report attributed to an unidentified private-equity investor who recently bought an office building here: “Nashville is a strong secondary market with some risk, but the price was much more reasonable than core assets in primary markets.”
Overall, Nashville ranked as the seventh-best market behind the following cities (in order): Dallas, Austin, Charlotte, Seattle, Atlanta and Denver.
Experts evaluated each city on its prospects in three categories: investment, development and homebuilding.
Nashville posted the second-strongest score in development. The No. 1 city in terms of development: Austin, the big brother Nashville keeps trying to catch.
“Similar to Austin, the only noticeable concern from interviewees is whether the current infrastructure will be able to keep up with growth at its current pace,” the report says.
Let’s condense that sentence down to one word: transit.
Nashville ranked seventh for investment, and 14th for homebuilding.