Q2 2025 Nashville Retail Market Report
Market Overview
Per the 2024 Census data, Nashville’s population is expanding at a significantly faster pace than the national average. Between 2020 and 2024, the metro area added approximately 160,000 residents —a 7.7% increase—compared to 3.1% growth nationwide. This rapid population growth is a key driver behind the Nashville retail market’s sustained tightness and limited space availability.
Nashville’s retail market remained notably tight, driven by robust demand and persistently low vacancy. The market’s vacancy rate held steady at 3.3%, a level that has remained below 3.5% since early 2022, while the availability rate was just 3.1%, underscoring limited space options for expanding retailers. Rents continued to trend upward, with average asking rents reaching $29.32/SF, reflecting a 4.8% year-over-year increase. New deliveries were limited to about 113,000 SF in the quarter, while approximately 708,000 SF remained under construction, over 65% of which was pre-leased, minimizing any immediate pressure on vacancy. Major lease signings in Q2 included tenants like Windlands Shopping Center and Shoppes at South Plaza, each taking over 30,000 SF, reflecting strong activity in both suburban and urban corridors. Despite headwinds from national store closures and retail bankruptcies, Nashville’s tight market turned these into opportunities, with vacated big-box space —such as the 92-store closure by Bargain Hunt— welcomed by landlords seeking to backfill at higher rents.
Overall, Q2 showcased Nashville’s resilience and continued appeal, driven by its fast-growing population, rising consumer demand, and limited new supply.
Rents | Vacancy | Construction
Nashville’s retail market remained tight and competitive in Q2 2025, characterized by low vacancy, steady rent growth, and constrained supply. Asking rents rose by 4.8% year-over-year, slightly below the historical 6% average, as the market matures and the supply of premium space remains limited. Vacancy held at 3.2%, respectively, well below historical norms, underscoring persistent tenant demand and a shortage of leasable inventory. Although the pace of rent growth has slowed, asking rents have climbed over 33% since 2020, making Nashville one of the more expensive retail markets in the U.S. This deceleration reflects not diminished demand, but a scarcity of high-quality space and a trend toward longer-term leases. On the supply side, retail deliveries have declined following a recent construction peak, with 600,000 SF delivered over the past year, falling short of historical averages. However, construction has rebounded slightly, reaching its highest level in a year with approximately 708,000 SF underway, equating to 0.6% of existing inventory. Notably, 70% of that space is pre-leased, signaling minimal near-term supply pressure and continued market stability.
Vacancy Rate
Source: CoStar Group, Inc.
By the Numbers
- Sales Volume: $168M
- Rent Growth: 4.8%
- Vacancy Rate: 3.3%
- Cap Rate: 6.3%
- Market Asking Rent Per SF: $29.32
- SF Under Construction: 708K
- SF Delivered: 113K
- SF Absorbed: (29.4K) | Q2 2025 | Source: CoStar Group, Inc.
Sales
The market’s investment activity maintained strong momentum, contributing to an annual transaction volume that reached $1.0 billion—the highest in two years and well above the historical average. Activity remained dominated by private investors, who continued to represent the majority of buyers amid minimal institutional presence. Most Q2 transactions involved smaller assets priced between $1–$3 million, typically trading at $150–$300 per square foot, with a notable share of triple-net deals exceeding $800/SF. Cap rates held steady, generally below 6.5%, with select properties, such as a freestanding urgent care sale in Rutherford County, transacting at a 6% cap. The sales landscape reflected continued confidence in the market, driven by value-add opportunities and consistent demand for stabilized, income-producing assets.
Nashville Retail Sales Volume & Price Per SF
Source: CoStar Group, Inc.
