The Great Reset of the national office market looks more like a traditional rebound in Nashville.
The first half of the year saw 18 prospective tenants to Music City with 800,000 square feet of office space on their collective shopping list, the Nashville Business Journal reported, citing Cushman & Wakefield.
“We have seen a significant increase in the first half of the year in our new-to-market pipeline,” Jenna Muller, senior director of office leasing for Cushman & Wakefield, told the Business Journal.
Those prospects don’t include the numerous local tenants looking to add office space in the city, she said.
“We’re tracking over 800,000 square feet, and it’s probably even higher than that because of all the growth that we’re seeing from existing companies who are here that are adding to their headcount,” she said.
Those 18 prospects were looking for anywhere from 5,000 to 500,000 square feet, Cushman & Wakefield found, with an average need of about 30,000 square feet.
An unidentified financial services firm is believed to be the biggest fish in Nashville’s pool of prospects, with an eye on about 500,000 square feet.
The mega-tenant is said to be searching several other markets as well.
The healthy roster of prospects offers the chance for a big step toward a return to normal for the Nashville office market, which has seen a slowdown similar to other cities around the U.S. amid work-from-home trends in the wake of the pandemic.
The stated needs of the prospects would more than double the 326,000 square feet of net absorption in the first half of the year. That amount of actual absorption and the lengthy prospect list that carries over into the second half of the year puts Nashville ahead of most markets.
“Four of the last five quarters have been positive absorption in Nashville, so we have a clear trend emerging in a positive direction for the city,” Muller said. “Nashville is certainly leading the way in terms of return-to-work and office market recovery from that standpoint.”
Health care and entertainment continue to be the leading sectors, but the industries that Nashville attracts are “quite diversified,” according to Muller.
Nashville’s reputation as a hub of the healthcare industry continues to underpin its office market, which has seen increasing demand related to job growth in the tech and media sectors, according to Cushman & Wakefield.
The recent decision by tech giant Oracle to shift its headquarters from Austin to Nashville is helping push an office rebound. A 121,000-square foot lease for Oracle was topped only by the143,000 square feet taken by social media brand TikTok in the first quarter.
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“This upward trajectory is expected to continue as Oracle and other large new-to-market tenants establish themselves in Nashville,” the report said.
The Midtown district of downtown Nashville has been a hotspot lately, with the average asking rent finishing the first half of the year just under $50 per square foot.