Nashville Office Sector Slows Down

The Nashville office market ended the first quarter of 2025 with mixed dynamics, according to the latest CommercialEdge data.

For context, the metro’s under-construction pipeline was on par with Manhattan’s, with the top five developments currently underway set for completion by the end of the second quarter.

Meanwhile, Nashville’s office investment activity saw a notable drop when compared to the same period last year. Only two properties changed hands, placing the metro among the most affordable office markets by average sale prices. Meanwhile, the vacancy rate remained steady while the coworking sector showed a consistent increase.

Slow transaction activity and affordable prices

Year-to-date through March, Nashville’s office investment activity generated $25.8 million in deals, with only two properties totaling 198,681 square feet changing hands. The dollar amount represented a 62.8 percent year-over-year decline in transaction volume.

Across similar markets, Nashville only outpaced Charlotte ($20 million) and the Inland Empire ($4 million), while most of its peers recorded sales volumes higher than $100 million, such as Phoenix ($171 million), San Diego ($192 million) and Houston (358 million).

One of the two properties that were traded in the metro is Meridian Cool Springs, a four-story office building in Franklin, Tenn., that traded for $19.5 million. Boyle Investment Co. picked up the 100,025-square-foot Class A property from PICA Group at the end of March.

The second sale was Avenue Construction’s $6.3 million purchase of the Westpark Building at Maryland Farms Office Park, a 98,656-square-foot building in Brentwood, Tenn. The 1982-built property traded through an auction in February and was previously valued at more than $17 million. The property last traded in 2013 through a portfolio deal totaling $24.8 million, sold by PGIM Real Estate to Crestview Funds. The new ownership plans to improve and renovate the vacant property, that will be rebranded to Westpark Exchange, according to Nashville Business Journal.

Office assets traded at an average sale price of $130 per square foot in Nashville—below the U.S. average of $183 per square foot. The metro’s sale prices outperformed those of Atlanta ($127 per square foot), Philadelphia ($117 per square foot) and Detroit ($80 per square foot). Among similar markets, San Diego led the rankings with $665 per square foot.

Nashville’s office vacancy rate keeps steady

The office vacancy rate in Nashville clocked in at 18.4 percent as of March—below the national rate of 19.9 percent and marking a 290-basis-point 12-month change. Among similar metros, Orlando recorded the lowest value, of 16.3 percent, while Austin saw one of the highest rates in the nation, of 28.5 percent.

The metro’s listing rates stood at $31.64 per square foot, below the national average of $33.42 per square foot and placing Nashville among the most affordable office markets, such as Dallas ($31.40 per square foot), Tampa ($30.31 per square foot), Phoenix ($28.57 per square foot) and Twin Cities ($26.46 per square foot). In contrast, some of the priciest average rents per square foot were recorded in the Bay Area ($53.89 per square foot), Austin ($45.82 per square foot) and San Diego ($43.36 per square foot).

Plenty of supply for office-to-residential makeovers

While the office sector struggles with post-pandemic challenges and key markets are hit with rising vacancy rates, the trend of office-to-residential conversions remains as viable option to repurpose underutilized and vacant office buildings. CommercialEdge launched the Conversion Feasibility Index, a tool that helps evaluate a property’s potential for a residential makeover while also showing which markets in the U.S. have strong office inventories for such projects.

The CFI score includes three tiers, with assets posting Tier I scores being the most suitable candidates for such adaptive reuse projects. Nashville includes 21 properties in this category, with a CFI score between 90 and 100 points. Totaling 1.7 million square feet, these properties are mainly Class B assets that came online between 1870 and 1984 and have an average property size of 81,989 square feet.

Meanwhile, the metro includes 94 properties in the Tier II category, with a CFI score between 75 and 89 points. These are encompassing nearly 9.3 million square feet.

Notable projects keep Nashville’s pipeline steady

As of March, Nashville’s under-construction pipeline comprised approximately 1.5 million square feet, representing 2.5 percent of existing stock—above the national rate of 0.7 percent. Among similar markets, Austin led with 3.3 percent and was followed by San Diego (2.8 percent), while Nashville outperformed Dallas (1.1 percent) and Houston (0.8 percent).

When adding projects in the planning stages to this figure, Nashville’s reached 4.8 percent—above the U.S. average of 2.5 percent, where Austin led the rankings with 11.4 percent.

In terms of square footage, Nashville was on par with Manhattan and outperformed Philadelphia (1.4 million square feet), New Jersey and Atlanta, that both had 1 million square feet underway. Other markets with smaller pipelines include Phoenix (741,426 square feet) and Charlotte (527,903 square feet).

The largest project currently underway is Parcel 9A1 of the Nashville Yards Entertainment District, at 955 Church Street. Southwest Value Partners broke ground in 2022 on the Class A, 12-story creative office project totaling 456,000 square feet, that is estimated to be delivered in June 2025. The office component is part of the Nashville Yards Entertainment District, that is set to total 2.5 million square feet of  office, retail and residential space across four buildings and is co-developed in partnership with Anschutz Entertainment Group.

Since the start of this year, developers broke ground on only one project, totaling 29,780 square feet, while deliveries included a 152,000-square-foot building, marking an approximately 144 percent year-over-year growth in office completions. This property is The Landings at River North, a three-story creative office building in downtown Nashville, owned and developed by Creek Lane Capital, that includes 78,000 square feet of office space and 74,000 square feet of retail space.

Nashville coworking sector’s gains continue

Nashville’s coworking sector included nearly 2.2 million square feet across 116 locations, marking a steady expansion from the 1.8 million square feet registered in August last year. Among similar metros, Nashville outperformed Austin (1.8 million square feet), Tampa (1.7 million square feet) and Orlando (1.3 million square feet). In contrast, Dallas led with 5.1 million square feet and was followed by Houston with 4.4 million square feet.

The list of Nashville’s top flex office providers is led by Espaces, with operations totaling 265,110 square feet, while the companies that follow include Regus (223,336 square feet), Spaces (128,000 square feet), Industrious (100,000 square feet) and Expansive (80,111 square feet).