United States -  Nashville

Overview:

Nashville benefits from a vibrant economy driven by the expanding tourism industry and healthcare sector. The city is one of the fastest growing in the country, as evidenced by the amount of residential construction, from luxury condominiums in The Gulch to apartment projects in Germantown and East Nashville. The local government’s focus on urban renewal has played an integral role in the city’s burgeoning population. Additionally, Ascend Amphitheater, a 6,800-seat, open-air event venue, opened in Downtown Nashville in July 2015.

Nashville’s musical heritage continues to support the city's status as a cultural center. Famous honky-tonks, chef-driven restaurants, and world-renowned music venues have been a catalyst to growth Downtown, which has been bolstered by the 2013 opening of the Music City Center. The new $600-million center, as well as the new 800-room Omni Nashville located adjacent to the center, has transformed the hotel landscape in Downtown Nashville, making Nashville one of the most popular meeting destinations in the country. The popularity of the city is evident in its strong transaction environment that continues to heat up. While sales in the last year failed to eclipse the per-room peak of over $400,000 set by the Marriott Autograph Collection Union Station in 2014, several high-profile assets have recently traded for well over $300,000 per room, including the Courtyard by Marriott Downtown, Courtyard by Marriott West End Vanderbilt, and Hampton by Hilton Downtown. As a result of increased demand, a stream of hospitality projects has been announced. Developers are in the planning stages for a Virgin Hotel, Embassy Suites by Hilton, Curio Collection by Hilton, Staybridge Suites, and Starwood Luxury Collection, to name a few. Furthermore, site work is underway on a Cambria Suites and JW Marriott, while the Westin, Thompson, Tribute Portfolio by Starwood, and 21C Museum Hotel are all under construction. New office developments also bode well for the area, such as Hospital Corporation of America’s planned North Gulch development, which will house the Sarah Cannon Research Institute and Parallon Business Solutions, and Bridgestone’s consolidation to SoBro in 2017. The diverse number of demand generators in and around Downtown Nashville, including Vanderbilt University and various state government agencies, in addition to the expanding healthcare sector and convention business, bodes well for hoteliers who can leverage strong demand levels to drive rate growth.

Positive economic forces and peak levels of demand have led to a significant amount of new hotel supply planned for Nashville. From luxury, boutique properties in The Gulch and Printers Alley to large, full-service hotels near the convention center, there is no shortage of hotel projects for the area. Nashville’s explosive RevPAR growth is fueling hotel development; however, supply is expected to outstrip demand in coming years, causing a moderate correction in hotel values after historic growth early in the decade. Thus, we anticipate healthy value appreciation in the long term as the new supply is absorbed and the local economy continues to strengthen.

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Nashville United States
Previous Year +0% (54 of 71) +1% (49 of 71)
Growth in 2017 +0% (54 of 71) +2% (36 of 71)
Growth in next 4 years +6% (58 of 71) +12% (32 of 71)

Change In Value For Market:

Nashville RevPar % Change

For more information, please contact:

J. Carter Allen, MAI
callen@hvs.com
  • +1 713 252-5995 (w)
Jai Patel
jpatel@hvs.com
  • +1 615 473-2447 (w)