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Commercial Department: Spotlight: Tennessee: September 2017

 

Spotlight: Tennessee

The Volunteer State thrives on health care and tourism

College-football fans often watch the Tennessee Volunteers on Saturdays each fall, but unless you live in the Volunteer State, you may not know the nickname’s origins.

Two occasions in the 19th century helped cement the name — first when Maj. Gen. Andrew Jackson led thousands of volunteer soldiers from Tennessee at the Battle of New Orleans during the War of 1812; and again in 1846, when 30,000 Tennesseans, more than 10 times the requested number, answered a call for reinforcements during the Mexican-American War.

In 1819, Jackson helped found the city of Memphis, which is Tennessee’s second-largest city today. Together with Nashville, the capital and largest city, the metropolises account for about 20 percent of the state’s population. Tennessee’s population grew at a steady pace of 4.8 percent between 2010 and 2016, and now has a population of more than 6.6 million, according to the U.S. Census Bureau. Murfreesboro, which sits about 35 miles southeast of Nashville, was the 10th-fastest growing city in the nation year over year in July 2016, U.S. Census data show.

Tourism is a key industry in Tennessee, topping $1.5 billion in state and local sales-tax revenue, and supporting nearly 153,000 jobs in 2015, the state’s Department of Tourist Development reports. The Tennessee Aquarium in Chattanooga is one of the largest freshwater facilities in the country and contributes $115 million a year to the local economy. Great Smoky Mountains National Park, encompassing 800 square miles along the border with North Carolina, drew more than 11 million visitors in 2016, far and away the busiest national park. And the National Civil Rights Museum in Memphis has a collection of 260 historical artifacts and 40 films, as well as an exhibit that offers a glimpse into the room at the Lorraine Motel where Dr. Martin Luther King Jr. was assassinated.

Tennessee’s economy is above average in terms of gross domestic product (GDP), ranking 18th in 2016 at $328.8 billion, the U.S. Department of Commerce reported. Last year, the largest industry sector was finance, insurance, real estate, rental and leasing, which accounted for 16.5 percent of the state’s GDP. The cost of living in Tennessee is relatively low, with the state’s median home value and median gross rent being well below national averages, according to the Tennessee Department of Economic and Community Development. The percentage of Tennessee’s population that lives below the poverty level is 18.3 percent, well above the national average of 15.5 percent, however.

skip to 3 Cities to Watch>>  

Nashville office market

c_2017-09_Spotlight_chart1.jpgCommercial real estate giant CBRE reported rosy details for Nashville’s office market last year: Vacancy rates were at record lows and asking rental rates were at record highs. The city’s technology and financial-services fields are fueling the growth, and a California-based investor made a $160 million purchase of five Class A properties in the suburban community of Franklin.

Last year, leases by Xerox Commercial Solutions, Universal Health Solutions, architecture and design company Houzz, and Warner Music Group were the city’s most significant in terms of size, totaling more than 215,000 square feet, according to commercial real estate company JLL. The city’s average asking rent for office space reached $25.46 per square foot as of second-quarter 2017, JLL reports.

Focus: Health care

Nashville is touted as one of the nation’s health-care industry hubs. The capital city’s metro area alone is home to some 400 health-related companies that have an estimated $38.8 billion economic impact on the local economy, the Nashville Health Care Council (NHCC) reports. There are 18 publicly traded health care companies in Nashville, and NHCC-member companies employ more than 628,000 worldwide and have global revenues of $144 billion.

Nashville’s Community Health Systems, HCA Healthcare and LifePoint Health operate more than one-third of the investor-owned hospitals in the U.S. In the city, Saint Thomas Health and Vanderbilt University Medical Center employ more than 10,000 people. The NHCC reported that health care companies occupied 17.4 percent of all office and industrial space in the state as of 2014. By 2022, an estimated 1 in 11 new jobs in Tennessee will be in health care.

Unemployment

c_2017-09_Spotlight_chart2.jpgThe state’s generally healthy economy is bolstered by a low unemployment rate, at 4 percent as of this past May. Tennessee hadn’t seen a figure that low since March 2001, according to the U.S. Department of Labor. The state added more than 56,000 jobs year over year as of this past April, and unemployment rates for the month decreased in all 95 counties, the state’s Department of Labor and Workforce Development (DLWD) reports.

Of the 56,000 jobs added over the year ending this past April, more than a quarter were created in April 2017 alone. Three subsectors — accommodation and food services, retail trade, and transportation and warehousing — each added at least 3,000 jobs this past April. Williamson County, south of Nashville, had the lowest unemployment rate in the state this past April at 2.6 percent.

Sources: Appalachian Magazine, CBRE, Colliers International, Greater Memphis Chamber, History.com, Knoxville Chamber, Knoxville Mercury, Nashville Health Care Council, National Civil Rights Museum, Nashville Post, National Geographic, Rutherford County Chamber of Commerce, Tennessee Aquarium, Tennessee Department of Economic and Community Development, Tennessee Department of Labor and Workforce Development, Tennessee Department of Tourist Development, The Tennessean, Urban Land Institute, U.S. Census Bureau, U.S. Department of Commerce, U.S. Department of Labor, U.S. News & World Report, Vanderbilt University.



3 Cities to Watch

Memphis

The “Birthplace of Rock ‘n’ Roll” is now the second-largest city in Tennessee with about 652,000 residents. It is known worldwide for its cultural influences and is attractive to investors. Colliers International hailed Memphis as one of the top 10 emerging U.S. industrial markets in 2017, with a vacancy rate of 6.6 percent, half of what it was five years ago. The city’s top employers include FedEx, International Paper, AutoZone and ServiceMaster.

Knoxville

c_2017-09_Spotlight_city.jpgThe home of the University of Tennessee and 186,000 people, the metro area has a diverse workforce and employers like the U.S. Department of Energy, Covenant Health and DENSO Manufacturing. The downtown area’s office-vacancy rate has dropped about 6 percentage points since 2013 and there are some progressive ongoing projects, including a 165-room Hyatt hotel, a new movie theater and a relocation of the city’s largest advertising agency.

Murfreesboro

The city has grown by almost 21 percent since 2010, U.S. Census figures show, with about 132,000 current residents. More than 22,000 students attend Middle Tennessee State University. As the seat of Rutherford County, with a population of 300,000, Murfreesboro has one of the state’s top public school districts. The Nissan plant employs 8,000 people and other large-scale employers include National HealthCare Corp., Ingram Content Group, State Farm Insurance and Amazon.

What the locals say

“Strong employment growth and the population of young adults have been a boon to Nashville’s multifamily market, with 96 percent occupancy since 2011. … Memphis, Knoxville and Chattanooga are a few Tennessee metros that announced a combined 10,900 jobs [between January 2016 and January 2017]. … Health care and education make up the largest office market share of any industry in the Nashville region, totaling nearly 8 million square feet. … Forbes recently released a report that named Nashville the city with the most high-wage growth since 2011 — out of 70 of the largest labor markets in the country.”

c_2017-09_Spotlight_local.jpg

Katie Barton 
Director of research,
Colliers International, Nashville 


 

Neil Pierson is editor in chief of Scotsman Guide Media. Reach him at neilp@scotsmanguide.com or (800) 297-6061.

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