Thousands of Apartments Sit Vacant in Downtown Nashville

Millionaire renters are flocking to ultra-luxury apartment rentals in downtown Nashville as oversupply in the rest of the market has kept the vacancy rate high.

A development boom starting in 2020 delivered nearly 26,000 apartments across the city, including almost 9,000 downtown, and with so many projects hitting the market at once, thousands of units are vacant, the Tennessean reported.

More than 4,300 available rentals sit empty within the city’s core, including hundreds at large projects like The Reservoir, Olive at Peabody Union and the Chartwell at Marathon Village, according to an analysis by the outlet and RentCafe.

While developers and landlords wait for absorption to catch up, a niche sliver of the market is already filling fast: ultra-luxury rentals preferred by millionaire tenants.

Nashville now counts 30 households earning $1 million or more per year who rent, up from none in 2019, the outlet reported. The vast majority of Music City’s 928 millionaire households still own their homes, but an ever-increasing number are opting for flexible, “turnkey” rental lifestyles.

These high-income renters are most drawn to polished amenities like rooftop pools, golf simulators, valet service and fitness centers, features that have become standard in newly built towers that are otherwise struggling to lease up.

The supply glut is mostly due to multiple projects coming online all at once.

“We’re looking back at a solid decade of Nashville being hot,” said Joel Sanders, CEO of Nashville-based Apartment Insiders. He said the hundreds of apartment units available at the city’s largest projects may be just the start of their offerings.

“Think of that as what is on the shelf at the store,” Sanders told the outlet. “Then you have what’s in the back of the store, which means they know it’s available. As soon as this one comes off the shelf, they’re going to backfill it.”

Nashville’s job growth, population gains and out-of-state migration are fueling long-term rental demand, even if concessions like free rent are harder to come by now. But the city’s construction pipeline has slowed. Multifamily deliveries are expected to drop more than 45 percent this year, according to Marcus & Millichap. Analysts predict rents could start climbing again within two years as inventory thins.

The surge in luxury leasing aligns with national trends: one in 11 millionaires in the U.S. now rents, according to RentCafe and population database IPUMS, which is housed at the University of Minnesota.

— Judah Duke