Abstract
Vacancy climbed amid a wave of new deliveries, while leasing volume held strong at over 2.3M SF, driven by renewals. With more than 5M SF under construction and additional deliveries imminent, supply will remain a key driver of market dynamics.
Nashville
ECONOMY
U.S. economic growth moderated in early 2026 as elevated interest rates and tighter credit conditions tempered business investment and slowed interest-sensitive sectors, though services activity remained stable and continued to anchor overall expansion.
Corporate strategy remained focused on efficiency and cost control, with continued investment in automation and AI, though at a more measured pace, as firms balanced long-term productivity initiatives against near-term economic uncertainty.
Ultium Cells announced plans to shift its 2.8-million square-foot (M SF) Spring Hill manufacturing facility from EV-battery production to energy storage system batteries, aligning with growing demand from energy infrastructure and data center users.
VACANCY
Nashville’s vacancy rate increased to 4.8% this quarter, a 200-basis point (bp) increase year-over-year (YOY) and a 30-bp increase quarter-over-quarter (QOQ). This marks the fourth consecutive quarter that vacancy has risen in the market.
The East and Nashville Core submarkets reported the highest vacancy rates at 6.5% and 5.3%, respectively. The Southeast submarket increased 90 bps QOQ to 4.7%. Vacancy in the East declined 10 bps QOQ, while the Core rose 20 bps QOQ.
The increase in vacancy this quarter is partially attributable to vacant deliveries. Over 1M SF delivered this quarter, with more than half remaining available. With over 2.4M SF set to deliver in Q2 2026, the construction pipeline is likely to continue pushing vacancy higher.
RENT
The Nashville logistics market continued to see growth in asking rents, posting a 5.8% YOY increase. However, the pace of growth has begun to decelerate, with average asking rents rising just 0.3% QOQ, compared to a 1.12% increase from Q3 2025 to Q4 2025.
Asking rents in the Nashville industrial market averaged $9.96 per square foot (/SF) in Q1 2026. The Nashville Core submarket continues to see the highest asking rent at $12.06/SF, representing a 3.17% increase YOY.
The North and Southeast have seen the greatest increases in asking rent YOY, at 36.6% and 15.7%, respectively. On the other hand, average rents in the East have fallen 3.6% YOY.
DEMAND
Q1 ended with over 314,000 SF of net absorption, down more than 2M SF QOQ. The East submarket was a bright spot, recording over 510,000 SF of positive net absorption.
Industrial leasing activity in Nashville exceeded 2.3M SF, up over 400,000 SF YOY. A handful of major renewals helped drive this figure despite muted net absorption.
The largest transactions took place in the East submarket. Starbucks renewed their 680,160 SF lease and FedEx renewed in their 379,080 SF space. Additionally, Crane Logistics signed a new 166,400 SF lease at 549 Aldi Blvd.
Q1 saw notable sales activity across the market. Raith Capital acquired a4-building, 604,084 SF portfolio for $77.25M ($127.88 PSF). Brennan Investment Group purchased Louisville Highway Industrial in the North submarket for $40.5M ($179.84/SF). Additionally, Denso signed a 280,000 SF BTS deal at the Cubes at Sparta Pike.
There was plenty of land sale activity this quarter. Alliance, Greystar, and Summit all made their first land acquisitions in Nashville.
CONSTRUCTION
Six projects delivered across five different submarkets in Q1, for a total of over 1M SF delivered. First Rockdale VII (541,500 SF) completed preleased to Schneider Electric. The remaining 5 buildings (759,000 SF) delivered vacant.
A handful of projects set to deliver in Q1 were bumped back. 2.4M SF of product currently under construction is set to deliver next quarter, including the 1.2M SF building at Earhart Industrial.
Five of the seven submarkets—Nashville Core, Southeast, North, Montgomery, and East— currently have projects under construction. The East submarket leads in total volume with 2.4M SF underway, while the Southeast has the greatest number of active projects, totaling 1.2M SF across eight buildings.
With five project starts in the first quarter, the development pipeline expanded by roughly 300,000 SF. The construction pipeline is up roughly 1.3M SF YOY.
Several new industrial parks, including Skybridge 40 and Cornerstone Business Park, were announced this quarter. Additionally, major parks such as Northpark Logistics and The COOP have multiple buildings currently under construction, with additional phases expected to begin construction in the near term.
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