Marcus & Millichap

Tennessee Local Retail Report

Second Quarter 2019

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Strong Employment, Retail Sales Trends Underpin Demand; Investors Target High Yields

Robust net absorption powering robust performance; development picking up. Underpinned by historically tight labor markets and rapidly increasing retail sales, the metros in Tennessee maintain a bright outlook. Years of hiring have boosted wage growth, encouraging retailers to take space, which has contracted vacancy rates to near the lowest levels of the current cycle. This upswing in demand has brought more interest in development to the markets, yet net absorption has consistently outpaced supply growth. As a result, the metros continually support excellent rent growth, particularly in the most desirable submarkets and locations. The transformation of downtown Nashville has rapidly escalated prices, while Memphis has received little development outside of the primary suburbs and urban core. The University of Tennessee remains a focal point of retail demand in Knoxville, encouraging extremely low vacancy rates near the student population.

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