Nashville, TN - Capstone Apartment | Multi-family ... · 2720 Eugenia Ave. Nashville, TN 37211 ... The Vanderbilt Effect Cornelius Vanderbilt gave $1 million to create a ... 1 Vanderbilt

Nashville, TNMulti-Family Market Summary: Spring 2015

Presented By:

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NASHVILLEIntroduction

CAPSTONE APARTMENT PARTNERS prides itself on the valuable contributions we are able to continue to offer our industry; thus, we produce periodic Multi-Family Market Summaries to further inform the clients and industry we serve. Capstone believes this market snapshot will benefit current owners, operators, investors, and other industry professionals who are active in the Nashville MSA, as well as others who are looking to break into this market.

Nashville Office2720 Eugenia Ave. Nashville, TN 37211

Adam KlenkInvestment Advisorc 615.861.9906

o 800.746.3175 ext. [email protected]

Andrew KlenkPartner

c 704.231.4882o 800.746.3175 ext. 704

[email protected]

Eric ConklinInvestment Advisorc 615.905.1895

o 800.746.3175 ext. [email protected]

ContentsIntroduction 2

Market Commentary 3

Economic Overview 4

Sales Transactions 5

Proposed Development 8

Why Choose Capstone? 10

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Bridgestone: More than Tires

Bridgestone Americas Inc. has broken ground on its new 30-story, $200 million headquarters located in the SoBro area of downtown Nashville. Upon completion in mid-to-late 2017, the new office building will house more than 1,700 employees. This will consist of the 1,100 currently in Nashville, plus 600 new jobs stemming from three out of state companies relocating to the city. The retail, roofing, and industrial products business units that Bridgestone is relocating to Nashville will generate $6 billion in annual revenue. The transition also encompasses the leadership of the retail group, which includes 2,200 company-owned stores.

With the lease expiring on Bridgestone’s current location in late 2017, the company launched a nationwide search for a new headquarters location to support future growth. The Nashville MSA will not only benefit from the jobs Bridgestone brings, but also from planned improvements to the surrounding community. Based on recommendations from a traffic study, restriping and other enhancements are planned for streets such as Fourth Avenue South and Molloy Street. Mayor Karl Dean also revealed that Bridgestone Americas has committed to donating $150,000 a year for five years, or $750,000 overall, to Metro School's Music Makes Us program.

The Vanderbilt Effect

Cornelius Vanderbilt gave $1 million to create a university in 1873. Since that time, Vanderbilt University has become an internationally

recognized research university in Nashville, Tennessee, with strong partnerships among its 10 schools, neighboring institutions, and the community. Vanderbilt offers undergraduate programs in the liberal arts and sciences, engineering, music, education, and human development, as well as a full range of graduate and professional degrees. An independent, privately supported university, Vanderbilt is the largest private employer in Middle Tennessee and the second largest private employer based in the state. In fact, an Austin-based company was able to quantify the total annual economic and tax revenue generated by the university and medical center. The study included factors such as operations and construction, employment, student and visitor spending, and business spending generated by Vanderbilt-related activities. Combined, these factors amounted to a contribution of $8.9 billion to the state economy in the 2013-14 fiscal year.

Multi-Family Fundamentals

The region gained approximately 8,000 jobs in the past year, and unemployment has dropped to just 5.0%. Despite 7,500 units currently under construction and another 7,000 proposed, the market continues to experience a low vacancy rate of 4.1% and a rent growth rate of 4.3% in the past year. Capstone expects the vacancy rate to rise slightly as new supply is introduced; however, the Nashville MSA will likely continue to experience higher rent growth in the 3.5-4.0% range for the coming year. Several companies have announced major expansions in recent months, which will continue to drive demand for apartments.

Apartment Comparison by ClassClass Units Vacancy Rate Avg. Sq. Ft. Avg. Rent Avg. Rent/Sq. Ft.

Lease-up 4,195 26.7% 944 $1,344 $1.42A (1-5 Years in Age) 5,400 4.1% 990 $1,282 $1.30B (6-15 Years in Age) 13,225 3.7% 1,039 $1,042 $1.00C (16-30 Years in Age) 34,854 4.2% 950 $941 $0.99C- (30+ Years in Age) 28,845 4.3% 909 $814 $0.90Stabilized Averages 82,324 4.1% 952 $935 $0.98Totals/Averages 86,519 5.2% 952 $955 $1.00

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WEmployment

In February 2015, the Nashville MSA’s unemployment rate remained at a low 5.0%. Moreover, the unemployment rate is significantly below the state’s average of 6.6% and slightly below the national average of 5.5%.

Major Employers (non-government)Rank Company Industry Employment

1 Vanderbilt University Education 23,021

2 Nissan North America Automotive 8,500

3 HCA Holdings, Inc. Healthcare 7,000

4 Saint Thomas Health Healthcare 6,500

5 Randstad Recruitment 3,400

6 Shoney's Inc. Restaurant 3,000

7 Electrolux Home Products North America Appliances 2,900

8 The Kroger Co. Grocery 2,863

9 Community Health Systems Healthcare 2,800

10 Cracker Barrel Old Country Store Inc. Retail 2,750

Wages & Population

There are 819,880 employees in the MSA who earn a mean hourly wage of $21.13 and an average annual income of $43,950. In comparison, the state and national annual income averages are $40,650 and $47,230, respectively.

Historical Population2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Hendersonville 43,581 44,363 45,746 46,755 47,554 48,332 51,589 52,349 53,080 54,068

Franklin 51,929 53,795 56,055 58,005 59,234 60,629 62,798 64,317 66,280 68,886

Murfreesboro 82,713 87,999 93,845 98,354 101,749 105,209 109,240 111,327 114,038 117,044

Nashville-Davidson 570,068 579,748 586,327 592,503 598,465 605,473 602,537 609,644 624,496 634,464

Nashville MSA 1,416,452 1,450,538 1,450,538 1,524,920 1,556,368 1,582,264 1,675,886 1,698,348 1,726,693 1,757,912

Tennessee 5,910,800 5,991,100 6,088,800 6,175,700 6,247,400 6,306,000 6,356,900 6,403,400 6,456,243 6,495,978Source: U.S. Census Bureau

Recent Employment Announcements

Bridgestone America Inc. will bring 1,700 jobs to the downtown area.

Under Armour announced plans to build a $100 million distribution facility in Mt. Juliet with over 1,500 new jobs.

Nissan North America plans to bring 1,000 new jobs to Smyrna.

Unipres USA expects to add 435 jobs over the next five years.

FedEx is building a new facility in Mt. Juliet and adding 350 new jobs.

M-TEK is locating its new North American headquarters to Murfreesboro bringing 250 jobs.

Comprehensive Logistics is creating 200 new jobs.

Healthstream plans to add 200 jobs over the next several years.

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SSales Transactions: 2014 to Present

Community YOC City Sale Date Units Sale Price Price Per UnitHickory Creek 1969 Nashville 3/3/15 200 - -Jackson Grove 1973 Hermitage 3/3/15 238 $18,800,000 $78,992Lincoya Bay 1968 Nashville 3/3/15 186 - -Sheffield Heights 1977 Nashville 3/3/15 202 $16,100,000 $79,703Green Meadow 1996 Murfreesboro 2/18/15 112 $4,554,666 $40,667Greentree Pointe 1997 Lebanon 2/18/15 130 $5,286,667 $40,667Rutherford Woodlands 1998 Murfreesboro 2/18/15 96 $3,904,000 $40,667Brentwood Station 1989 Nashville 1/26/15 196 $18,000,000 $91,83723Hundred at Berry Hill 2013 Nashville 1/14/15 266 $61,200,000 $230,075Hawthorne South Oaks 1984 Nashville 1/12/15 341 $30,400,000 $89,150Summerlake 1988 Murfreesboro 1/5/15 176 - -Aventura at Providence 2007 Mt. Juliet 12/31/14 334 $47,750,000 $142,964Velocity in the Gulch 2011 Nashville 12/18/14 220 $54,278,060 $246,718Dwell at McEwen 2009 Franklin 12/15/14 370 $81,100,000 $219,189Village West 1969 Nashville 12/7/14 288 $5,350,000 $18,576Hampton Chase 1976 Nashville 11/21/14 202 $14,000,000 $69,307Blackstone 1993 Nashville 11/20/14 73 $8,150,000 $111,644Lee 1920 Nashville 11/20/14 80 $9,150,000 $114,375Riverwood 1983 Nashville 11/14/14 200 - -Hickory View 1981 Nashville 11/3/14 120 $8,000,000 $66,667Rivergate 1984 Goodlettsville 10/16/14 200 - -Arbours of Hermitage 1974 Hermitage 9/29/14 350 $25,625,000 $73,214Carrington Ridge 1975 Hendersonville 9/26/14 152 $11,550,000 $75,987Stoneridge Farms at Hunt Club 2002 Gallatin 9/24/14 364 $42,368,905 $116,398Creekstone 1985 Nashville 9/23/14 316 $22,800,000 $72,152Gale Lofts 2007 Nashville 9/10/14 96 $15,400,000 $160,417Estates at Brentwood 1994 Brentwood 9/1/14 254 $42,200,000 $166,142Lenoxgate 1995 Goodlettsville 9/1/14 264 $19,900,000 $75,379Abbington Heights 1996 Antioch 8/1/14 274 $17,900,000 $65,328City Edge Flats 2000 Murfreesboro 7/23/14 83 $4,436,000 $53,446Ridge at Green Haven 2005 Millersville 7/21/14 191 $9,650,000 $50,524Beechwood Terrace 1984 Antioch 7/18/14 300 $21,400,000 $71,333Willow Grove 1972 Nashville 7/18/14 244 $13,750,000 $56,352

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Community YOC City Sale Date Units Sale Price Price Per UnitWoodbridge 1978 Nashville 7/18/14 220 $16,000,000 $72,727

Stoneridge Farms at Hunt Club 2002 Gallatin 7/15/14 364 - -

Hillwood Pointe 1995 Nashville 6/20/14 180 $14,850,000 $82,500

Meridian at Hermitage (FORMERLY GREEN LEAF AT HERMITAGE) 1974 Hermitage 6/4/14 261 $13,800,000 $52,874

Villages at Spring Hill 1994 Spring Hill 5/22/14 176 $14,200,000 $80,682

Richland Falls 2012 Murfreesboro 5/15/14 190 $21,000,000 $110,526

Alta Loma 1971 Madison 5/1/14 132 $5,500,000 $41,667

Hermitage Garden 1962 Old Hickory 4/29/14 73 $2,850,000 $39,041

Elliston 23 2013 Nashville 4/28/14 331 $95,100,000 $287,311

Pine Brook 1973 Hermitage 4/28/14 134 $6,000,000 $44,776

Vista Germantown 2011 Nashville 4/3/14 242 $53,250,000 $220,041

Wyndchase Aspen Grove 1997 Franklin 3/15/14 560 $83,000,000 $148,214

Rutherford Pointe 1996 La Vergne 2/27/14 130 $6,450,000 $49,615

Roundtree 1971 Nashville 2/26/14 144 - -

Spinnaker Cove 1986 Hermitage 2/20/14 278 $24,750,000 $89,029

River Chase 1999 Nashville 2/14/14 212 - -

Canterchase 1984 Nashville 2/12/14 235 - -

Jamestown 1986 Nashville 1/15/14 101 $7,300,000 $72,277Elliston 23 Dwell at McEwen

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$41.9M

$13.3M $13.9M

$23.7M

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

Class A Class B Class C AVERAGE

Average Transaction Sales Price

$158,532

$66,733 $62,024

$97,837

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

Class A Class B Class C AVERAGE

Average Price Per Unit

254

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100

150

200

250

300

Class A Class B Class C AVERAGE

Average # of Units Per Transaction

2008

1993

1973

1988

1950

1960

1970

1980

1990

2000

2010

2020

Class A Class B Class C AVERAGE

Average Year of Construction

Class A represents renovate properties and properties built from 2000-2015, Class B includes properties constructed from 1985-1999, and Class C signifies properties constructed in 1984 or earlier.

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TCommunities Proposed (100 Units and Above)

Developer Community Units Road/Intersection Submarket

Division Street Land Partners Crescendo 303 641 Division St. Downtown

Proffitt Dixon Germantown Fountains 294 Taylors St. Downtown

Price Development PDG Germantown 256 Monroe St. Downtown

LIV Development LIV West Eastland 310 1034 W. Eastland Ave. North

St. Clair Holdings Stacks on Main 268 5th St./Main St. North

Cambridge Holdings One City 300 Charlotte Ave. West End

Lifestyle Communities LC Germantown 450 1226 2nd Ave. Downtown

Giarrantana Development Paramount 300 5th Ave. Downtown

Stonehenge Real Estate West 46th 171 4508 Charlotte Pk. Southwest

Bristol Development Group Bristol 12 South 164 2214 12th Ave. West End

Alliance Residential Broadstone Eighth South 154 2407 Franklin Pk. West End

Crescent Resources Crescent Music Row 280 Division St. West End

Grace Development Grace at Elliston Place 300 Elliston Pl. West End

Forestar Grand Avenue 230 Music Square West End

Worthing Companies Heights at Charlotte Avenue 259 2700 Charlotte Ave. West End

Lennar Multifamily Lennar Berry Hill 320 2350 Franklin Pk. West End

Lennar Multifamily M Residences 300 Chet Atkins Pl. West End

Novare/Baston Cook Skyhouse 352 Broadway West End

SWH Residential Partners Grove at Shadow Green 228 2000 Toll House Cir. Franklin

North American Properties Nichol Mill Lofts 363 Nichol Mill Ln. Franklin

Bristol Development Group Uptown at Ovation 392 Carother Pkwy. Franklin

TDK Construction Foxland Crossing 68 (232 COMPLETE) 1391 Foxland Blvd. Hendersonville

Hartmann Plantation Hartman Plantation 200 (123 COMPLETE) 2000 Hartmann Plantation Ct. Lebanon/Mt.Juliet

Universal Builders Northtown Gardens 360 Nonaville Rd. Lebanon/Mt.Juliet

Panthers Properties Integra Creek 84 (264 COMPLETE) 3625 Mansion Pk. Murfreesboro

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Developer Community Units Road/Intersection SubmarketLincoln Property 909 Flats 232 909 Rosa L. Parks Blvd. Downtown

Alliance Residential Broadstone Germantown 276 1100 3rd Ave. Downtown

Embrey Partners Carillon 306 5th Ave./Jackson St. Downtown

SWH Residential Partners Terra House 194 Middleton St. Downtown

Giarrantana Development Sobro 313 3rd Ave. Downtown

Spectrum Properties The Cameron 328 Carothers Pkwy. Franklin

Bristol Development Tapestry Brentwood 393 300 Centerview Dr. Franklin

Carroll Companies Glass Creek Village 216 (144 COMPLETE) 401 Old Pleasant Grove Rd. Lebanon/Mt. Juliet

Lifestyle Communities LC Providence 451 LC Providence Lebanon/Mt. Juliet

The Dobbins Group Providence Central 209 Providence Pkwy. Lebanon/Mt. Juliet

TDK Construction 3343 Memorial 196 (46 COMPLETE) 3343 Memorial Blvd. Murfreesboro

Gross Builders Belden Reserve 264 425 Swanholme Dr. Murfreesboro

Carroll Companies Everwood at the Avenue 336 Robert Rose Dr. Murfreesboro

Lifestyle Communities Hensley Station 162 (241 COMPLETE) 1206 Robert Rose Dr. Murfreesboro

Smyrna Commons Dev. Partners Copperfield Lodge 288 Nissan Dr. Smyrna/ La Vergne

Carroll Companies Heron Point 324 100 Heron Point Dr. Southeast

TDK Construction The Summit 190 (95 COMPLETE) 7201 Charlotte Pke. Southwest

HG Hill Realty Sylvan Heights 262 Charlotte Ave. Southwest

Faison 1505 Demonbreun 209 (178 COMPLETE) 1515 Demonbreun St. West End

Stonehenge Real Estate Artisan on 18th 63 (90 COMPLETE) 819 S 18th Ave. West End

The Forestar Group Acklen 320 111 Acklen Park Dr. West End

Giarrantana Development 22 State 146 22nd Ave. N./State St. West End

Giarrantana Development 1818 Church Street 142 1818 Church St. West End

Buckingham Companies Aertson Midtown 350 Division St./Broadway St. West End

Lincoln Property Aspire Midtown 279 2400 Charlotte Ave. West End

Phoenix Property Cadence 193 16th Ave./McGavock St. West End

Childress Klein Element Music Row 431 Element Music Row West End

Residential Group Metrocenter 320 45 Vantage Way West End

Stonehenge Real Estate Opus 29 139 29th Ave./Burch Ave. West End

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E?Carolinas Georgia Virginia Tennessee Kentucky Alabama Florida West Virginia

The People Sell the Deal

Capstone’s Southeast & Mid-Atlantic Investment Sales Team is among the market leaders within our industry sector and respective region. We place client service above all else, and can guarantee that no one else will work smarter and harder in achieving the highest level of results for our clients. We don’t rely on a logo to sell the deal, but rather utilize the industry expertise and investment acumen, tremendous drive and work ethic, and unbeatable salesmanship of the team members assigned to each project. At the end of the day, it’s the individuals that drive value and sell the deal, and we know the capabilities of our individual team members are second to none.

Market Expertise & Product Niche

Capstone sits atop the private capital sector of multi-family investment sales for multiple reasons. Our deliberate and concentrated focus and expertise in not just the primary markets of the Southeast & Mid-Atlantic, but also the secondary and tertiary markets within our region, identifies us as the ideal candidate for such assignments. Capstone’s investment sales team has completed a multitude of transactions across the primary, secondary, and tertiary markets of the Southeast & Mid-Atlantic, and our track record of success can be attributed to our comprehensive coverage and expertise among these markets, as well as our relationships with the owners and investors who remain active in this environment.

National Exposure via Cutting Edge Technology

Capstone has developed and maintains industry leading national databases, expansive information delivery methodologies, and various proprietary activity tracking systems. These tools are utilized daily by the investment sales team, analysts, and back-office support staff allowing for optimal operational efficiency. This enables Capstone’s investment brokerage team to spend nearly all of its time servicing clients, interacting with industry players and active asset traders, and promoting transactions.

Reputation and Results

Capstone prides itself on its impeccable industry reputation and the core values and behaviors of the firm that drive daily operations. The firm possesses an unblemished reputation and track record industry-wide, and, as such, the firm’s trusted relationships among the apartment investment community continue to facilitate seamless, fluid, and successful sales transactions.

* Information in this report has been provided by the following: Nashville Real Data Report March 2015, U.S. Census Bureau, Costar, Business Journals, LoopNet, Bureau of Labor Statistics, county tax records, and various multi-family industry contacts. Area images provided by Ron Cogswell (pg. 1) and Robert Claypool (pg. 2 [left]) via https://creativecommons.org/licenses/by/2.0/, as well as Rain0975 (pg. 2 [top]) via https://creativecommons.org/licenses/by-nd/2.0/.