Tennessee’s CRE, Farmland, and Commercial Land Markets Outlook

Quick answer

Retail space is tight, and the demand for Class A offices is strong in Nashville, though multifamily is still absorbing recent deliveries. Middle Tennessee is seeing bullish economic and population growth.

While apartments are momentarily digesting a supply boom, virtually every other commercial and agricultural real estate sector (shops, offices, industrial facilities, and land) is seeing tight supply and rising demand.

Private Capital Investors can finance eligible land and commercial-property transactions across Tennessee.

How did farmlands in Tennessee perform?

Farmland values increased nationally this year, and Tennessee led cropland growth.

National cropland values rose 3.3% to $6,020 per acre. Pasture values also rose 4.2% to $2,000 per acre.

By comparison, Tennessee’s cropland value rose 5.8% to $6,400 per acre — that was the largest percentage increase among all states.

*Farm real estate includes land and farm buildings, so it should not be compared directly with bare cropland or pastureland values.

Despite these improvements, however, many farmers are barely making a profit on traditional crops and are trying new ones to stay afloat.

Particularly in northwestern Tennessee counties like Weakley and Obion, they’re planting off-season or secondary crops like winter canola.

CRE investors need to be aware of the Tennessee Farmland Preservation Act (a state law passed by the legislature) and Preserving Land for Agriculture Now, or PLAN (the official state program created by that law and administered by the Tennessee Department of Agriculture).

Tennessee is losing farmland to urban expansion at an estimated 9 acres per hour, so the state government is essentially paying landowners to permanently keep their land for farming.

The state uses grant money to pay landowners to sign a legal agreement.

In exchange for payment, the owner promises that the property will never be sold to real estate developers or converted into non-agricultural use.

Note that this restriction legally stays attached to the land title forever, even if the farm is sold or passed down to future generations.

What is the state of Tennessee’s CRE market?

Each metro in Tennessee’s commercial real estate market has a different source of tenant demand, which affects the types of property that may suit an investor’s strategy.

The state’s highest-profile market is still Nashville. Developers aren’t building much new retail space, rendering availability tighter.

Businesses looking for office space here exclusively want modern Class A buildings in walkable vibrant neighborhoods.

Meanwhile, unlike Nashville, which relies heavily on corporate tech, Memphis’ economy is supported primarily by supply chains.

This major national logistics hub (with FedEx’s superhub, major rail lines, highways, and the Mississippi River) saw steady demand for warehouse space.

Properties with access to highway routes and cargo ports are still the most valuable.

Knoxville derives CRE demand mainly from local education.

The University of Tennessee and nearby research centers push the demand for specific real estate sectors higher — not just student housing and R&D office space, but also retail space that caters to students and university staff.

In Chattanooga, the traditional manufacturing base (automotive, heavy industry) is combining with a growing technology sector to push higher the demand for industrial buildings and flex spaces.

Fort Campbell (a major US Army base) in Clarksville keeps the demand for new housing strong. As new residential neighborhoods are built, businesses naturally follow.

CRE in this part of Tennessee is significantly cheaper than in Nashville, but investors need to commit to a longer holding period to benefit from major price appreciation.

A deeper look at retail scarcity in Nashville

The near-term fundamentals of Nashville’s retail market are strong: vacancy in Q1 2026 was only 3.6%.

Asking rents reached $30.26 per square foot and rose 4.2% year over year.

Roughly 770,000 square feet was under construction, but only 60,800 square feet had been delivered during the preceding year — and that limited supply sustained landlord pricing power.

Nearly 1 in 5 office spaces (18.2%) in the market sat empty; still, tenants filled over 526,000 square feet of net space, and almost all that growth happened in top-tier properties.

Class A landlords charged an average of $42.60 per square foot (well above the market average of $39.12).

Mixed-use CRE  like Ashwood 12 South (a 116,500-square-foot development that pairs high-end storefronts/restaurants with top-tier office spaces right inside a pedestrian-friendly neighborhood) seems to be thriving.

Tenants are looking for connected workspaces rather than corporate parks that tend to be isolated. Of course, the model isn’t a guaranteed win everywhere.

How did Nashville’s multifamily market perform?

Developers completed 5,128 units through July 2026. Rent growth was modest, and occupancy was stable at 93.6% in June.

Advertised asking rents reached $1,681 per month (they rose only 0.3% over the preceding three months).

New construction plummeted by 48% year-to-date.

Once the current batch of under-construction projects finishes, very little new building inventory will hit the market, which may reduce future competition for existing property owners.

Despite recent oversupply challenges, investors are actively buying multifamily properties. They spent almost $639 million in the first seven months of 2026 (that’s 20% higher than the previous year).

Is Middle Tennessee seeing a CRE boom?

It’s too early to tell, but population growth and business expansion in Middle Tennessee have increased demand for retail and industrial, as well as for commercial land across surrounding counties.

A network of distinct growth corridors seems to be emerging

Warehouses and flexible industrial spaces seem to be the safest plays in the region, particularly assets in freight corridors — those close to I-24 and I-840, for example, which connect suburban cities like Murfreesboro, Smyrna, La Vergne, and Lebanon.

Downtown offices are struggling; in contrast, suburban office spaces and medical clinics perform well in thriving hubs like Cool Springs and Murfreesboro.

It may be profitable to buy raw land farther outside Nashville if the land gets rezoned or gets connected to the essential physical utilities and transport networks.

Be sure to check zoning and entitlements.

Finance your next deal in Tennessee

Private Capital Investors finances agricultural land, raw commercial land, and transitional commercial properties in Tennessee:

Our land and agricultural loan sizes range from $1 million to $50 million, with up to 70% loan-to-value.

Our bridge and hard money programs can reach 85% loan-to-value for eligible commercial transactions.