Nashville’s office vacancy rate ticks down

If it’s not one thing, it’s another.

Nashville’s office vacancy rate ticked down in the third quarter to 14 percent, improving from a high of 15.4 percent in the first quarter.

For months, Nashville’s commercial real estate community pointed to the largely empty Pinnacle at Symphony Place as the bugaboo in the office space game, its empty floors the reason for the high rate of emptiness in the city. But those claimants have backed off, partially because the Pinnacle is close to 50 percent occupancy and also because the vacancy rate has started going in the right direction.

Rents are going back up, too: up 15 cents to a $19.62 per-square-foot average. The hand-wringing has slowed to nervous hand-rubbing.

Still, the market is far from a golden age. Downtown — in Nashville, like most cities, supposedly the commercial real estate crown jewel — is hovering north of 20 percent vacancy, in large part due to the phantom at the corner of Third and Demonbreun. Less glitzy markets, like MetroCenter, have vacancies short of 6 percent, shoring up the market for their faltering, fancier neighbors.

While office spaces slowly fill, industrial space vacancies remain high — and getting higher.

The May flood took buildings in Nashville’s heaviest industrial areas — notably along Interstate 24 and in various near-river corridors — offline. Empty buildings were unfit for use, so no leases followed; however, they didn’t meet the technical definition of “vacant.” Now those buildings are open for business — but no one’s there to do any. The vacancy rate is 10.8 percent, and things got more vacant in the third quarter, with 1.8 million square feet empty where it wasn’t before.

Industrial clients tend toward the timid, and analysts point to worries about double-digit recessions, a murky political climate and coming changes to accounting procedures as reasons for the wait-and-see attitude. The good news is, unlike the office types, industry often rebounds more swiftly even if the impetus comes more slowly.

Real estate types will tell you all markets are different. That can be true even inside the same city.