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Report cites hip factor, diverse economy and low cost of living and doing business for Music City's one-notch rise from 2016.
Nashville is ranked sixth among the nation’s top cities for real estate investing in 2017, a one-notch jump from a year ago
in the annual Emerging Trends in Real Estate
The latest report from PricewaterhouseCoopers along with the Urban Land Institute cited the Music City's hip factor that's reflected in the high percentage of college graduates choosing to stay in the area. It also highlighted the diverse economy with health care, technology, tourism and education among sectors that should continue to create jobs next year.
"Low cost of doing business and low cost of living are two economical pieces of the secret sauce," Mitch Roschelle, a real estate team leader with PricewaterhouseCoopers, said about another factor in economic growth of cities such as Nashville.
Among favorable statistics cited on Nashville, the cost of doing business here is 6 percent less than the national average. Reflecting a relatively lower cost of living, the median housing price in the metro Nashville area is $225,000, 7 percent cheaper than the nationwide median price of $243,000.
Similar to higher learning institutions in top-ranked Austin, Texas, Nashville area universities such as Vanderbilt also provide talented employees and cultural activities that Roschelle said are important to the new workforce of millennials and even baby boomers.
Most cities ranked within the top 10 for real estate investing next year are so-called 18-hour secondary cities. They don't have all of the amenities of a large metropolis such as New York, but have become attractive to young professionals.
No. 1 Austin is followed by Dallas/Fort Worth with Portland and Seattle third and fourth among the top 10 whose niche neighborhoods and economic diversity also factored into their high ranking. Nashville is followed by other up-and-coming 18-hour cities such as No. 7 Raleigh/Durham and ninth-ranked Charlotte, N.C.
The long-running Real Estate Emerging Trends
report that this year ranked the 78 largest U.S. cites was based on a poll of 1,000 real estate market participants nationwide. Other trends highlighted included the growth in optionality, spaces that can be used as an office during the day and a party venue in the evening.
An upper-tier secondary market
Nashville is cited as an example of a market that has transitioned to an upper-tier secondary market. But that transition is creating issues with the primary concern being that national developers could overbuild the market, especially in the industrial and multifamily sectors.
"At the same time, the increase in overall real estate activity in the market is putting pressure on the availability of appropriately zoned land for all property types," the report read. "The rising costs of construction labor and building supplies also are keeping new development at lower levels. Despite rising demand for office space, new construction remains at manageable levels."
One interesting observation the report cited is participants in the Urban Land Institute's local district council's Emerging Trends forum characterized the Nashville market as having "plenty of debt, but not as much equity."
In terms of homebuilding prospects, Nashville ranked fourth nationwide in the Real Estate Emerging Trends
report behind only Raleigh/Durham, Charleston, S.C. and Portland.
The report also included trends and outlook for property types such as commercial space, retail, apartments, office space and hotels.