Economy
Nashville’s labor market remained resilient in the third quarter, with the unemployment rate declining 10 basis points (bps) year-over-year (YOY) to 2.9%, well below the national rate of 4.2%. Total nonfarm employment increased 0.8% YOY to more than 1.2 million jobs. Among key office-using sectors, professional and business services employment grew 0.9% YOY in August, while financial activities employment declined 2.5%. Despite uneven sector performance, low unemployment and continued job growth should provide a stable foundation for Nashville’s office market.
Supply and Construction
Nashville recorded its first office construction completions in more than a year, with AJ Capital Group’s three Wedgewood Village buildings in Airport South delivering 231,320 square feet (sf) in Q3. Nearly 69% of the space was preleased at completion. Following these deliveries, the active construction pipeline declined to just 60,000 sf, its lowest level since at least 2019. The remaining project, Voce in Midtown, is slated for completion in April 2027.
Occupancy gains largely offset newly delivered vacant space, keeping overall vacancy essentially unchanged quarter-over-quarter (QOQ) at 16.7%. On an annual basis, vacancy was down a more significant 28 bps YOY. Four of the metro’s nine submarkets recorded quarterly vacancy declines, led by Airport North, where the rate fell 90 bps to 14.1%. Conversely, Airport South recorded a 123-bp increase to 15.1%, reflecting 71,000 sf of vacant space delivered at Wedgewood Village.
Demand
New leasing totaled 504,579 sf in the third quarter. Bolstered by robust H1 demand, year-to-date (YTD) new leasing reached 2.3 msf, up 7.4% from the same period in 2025 and the highest for the first three quarters of a year since 2021. Cool Springs/Franklin led the metro with 100,765 sf of new quarterly leasing, followed closely by Midtown (97,395 sf), which also recorded the most new lease transactions at 18. The quarter’s largest new leases included the Metropolitan Government of Nashville and Davidson County’s 63,136-sf commitment at Airways Plaza in Airport South and Koniag Government Services’ 50,612-sf lease at Metropolitan Airport Center I in Airport North.
Renewals totaled 199,667 sf in Q3, bringing YTD volume to 986,974 sf, 34.5% ahead of last year’s pace and more than in any comparable period since 2019.
Overall net absorption reached 137,532 sf, the highest quarterly total since Q2 2025, bringing YTD occupancy gains to 230,173 sf. Airport South led the market with 128,395 sf of positive net absorption, driven by 160,000 sf of occupancy at the three newly delivered Wedgewood Village buildings. Airport North and the Nashville Central Business District (CBD) each recorded more than 30,000 sf of occupancy gains, while Brentwood and Cool Springs/Franklin posted losses.
Pricing
Overall asking rents, weighted by vacant space, increased 2.6% QOQ to $37.29 per square foot (psf) gross, although rates remained 2.7% below 2025 levels. The quarterly increase was largely driven by Airport South, where asking rents rose from $27.74 psf to $34.09 psf following the delivery of the Wedgewood Village buildings which marketed gross asking rents in the $70s. The addition of premium-priced office space increased the submarket’s average and contributed to metro-wide rent growth. Meanwhile, CBD asking rents edged up to $40.93 psf, while Midtown remained the metro’s most expensive submarket at $50.99 psf.
