Key Advantages
Nashville’s strategic location and favorable market conditions position it as a significant player in the U.S. industrial sector. With accessibility to most of the U.S. population within a two-day ground delivery window, the market continues to attract developers, investors, and businesses. Low vacancy rates, coupled with strong demand and pro-business policies, are expected to drive further growth in the coming years.
Demographic Strength
Nashville’s growing population and robust labor force reinforce its industrial appeal:
- Population Growth: Over 2.4 million residents live within 50 miles of Nashville’s core, with a five-year projected growth rate of 6.4%. Within 250 miles, the population reaches 29.1 million, surpassing markets like Houston, St. Louis, and Memphis.
- Labor Force Expansion: Nashville’s warehouse labor pool comprises 54,204 workers, projected to grow by 13% by 2034. The average hourly wage of $17.86 for non-supervisory warehouse workers is slightly above the national average.
Incentive Programs
Tennessee’s incentive offerings bolster Nashville’s attractiveness to businesses:
- Economic Support: Over $260 million in incentives have been awarded in the last five years, averaging $9,300 per new job in metro Nashville.
- Key Program: The Job Tax Credit allows businesses to offset up to 50% of franchise and excise taxes for creating at least 25 new jobs and investing a minimum of $500,000. Unused credits can be carried forward for 15 years.
Strategic Logistics Hub
Nashville’s central location enhances its logistical appeal:
- Accessibility: 72% of the U.S. population is reachable within two days by ground delivery.
- Transportation Infrastructure: The city is one of only six in the U.S. where three major interstate highways intersect, fostering connectivity for global logistics and distribution firms.
- Air Cargo Growth: A $1.4 billion expansion at Nashville International Airport supports its growing cargo capabilities, serviced by six major air carriers.
Market Dynamics: Supply & Demand
Nashville’s industrial sector has experienced rapid growth:
- Inventory and Absorption: With 218 million square feet of industrial space, Nashville ranks as the 30th largest U.S. industrial market but saw the eighth-highest net absorption in 2023 at 9.7 million square feet.
- Vacancy and Rents: Strong demand kept vacancy rates at 3.4%, significantly below the national average. This pushed asking rents to a record $7.84 per square foot, a 5.8% year-over-year increase.
- Construction Activity: Developers responded to the strong market fundamentals by adding 10.3 million square feet of space in 2023, much of it speculative. While this may temporarily increase vacancy rates, sustained demand and a slowdown in new construction are expected to stabilize the market.
Future Outlook
Nashville’s combination of strategic location, expanding labor pool, and strong market fundamentals make it one of the most promising emerging industrial markets in the U.S. Despite a short-term rise in vacancy rates due to construction, the city’s long-term prospects remain bright as it continues to attract businesses and investors.
