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  1. Cities
22 November, 2022

Nashville’s diverse economy is music to investors’ ears

Nashville is known as a music and cultural hub, but its low cost of living and economic record is striking the right note with investors.

By Ruth Strachan

Located on the Cumberland River, Nashville is the capital city of Tennessee and sits in the heart of the state. Known globally for its music and culture, Nashville – or Music City USA, as it is sometimes known – is a key hub for American country music.

Despite this rich legacy in music, Lori Odom, senior vice-president of the Nashville Area Chamber of Commerce, argues that the city is no one-trick pony. “Music and entertainment is the global brand of Nashville, but there is so much more that is happening with manufacturing, healthcare and corporate office relocations,” she says.

Odom explains that as one of the fastest-growing cities in the US, Nashville has seen significant economic growth.

In fact, when tracking the previous decade – between 2010 and 2020 – Nashville has seen above average growth, when compared with the state of Tennessee and the US as a whole in population, in both GDP and job creation.

Between 2020 and 2021, the Nashville Area of Chamber Commerce tracked 58 new investment projects with a combined value of $6.6bn. Robert Mohon, a former president of the Real Estate Investors of Nashville and a veteran of the credit industry, says the city has rebounded from the impact of Covid-19 “fantastically”. In particular, tourism has rebounded well, with Tennessee hotels in general on target to break records at ten million hotel rooms booked in total in 2022.

According to the Nashville Convention and Visitors Corporation, in 2019, Nashville’s tourism and hospitality sector employed approximately 74,440 people and accounted for $7.5bn in annual economic impact.

According to the US Bureau of Labor Statistics, in 2020, Nashville had 52,975 businesses in total with the highest number being in professional, scientific and technical services (7,231). Retail trade (6,275), healthcare and social assistance (4,436) and accommodation and food services (4,412) were in second, third and fourth, respectively.

Nashville's robust real estate climate

Nashville was named the top real estate market in the US for a second year running in the PwC and Urban Land Institute’s Emerging Trends in Real Estate report in 2022.

“Real estate never really stopped [as a result of Covid-19],” says Mohon. “I think it was just a few days that all the realtor and house showings stopped in March 2020, and then they resumed again in reasonably full force.”

The PwC report forecasts that Nashville will continue seeing strong levels of investment in its real estate market in 2023, and named the city as one of the three fastest-growing metro areas alongside Austin and Raleigh/Durham. 

People looking to buy real estate and relocate to Nashville could be swayed by the city’s attractive cost of living record. In 2021, Nashville ranked below average in the US for cost of living, according to the Council for Community and Economic Research’s index.

“The quality of life and the cost of living in Nashville is more affordable," says Odom. "[Tennessee is] a low-tax state, so that allows for savings as people move here from the coasts and are used to paying more. We do not have a state income tax. That financial element makes Nashville a great place to live.”

A southern welcome

Situated in the 'Bible Belt' of the US south, religion plays a key role not just in the music being produced in Nashville but also in the publishing economy.

“Thomas Nelson publishers is based here, the largest Bible publisher in the world," says Mohon. "Songwriting, creative publishing and intellectual property are very important industries here.”

He believes that this religious culture makes for a friendly population, saying: “Nashville is a friendly and diverse town, with people from many places. Everyone is welcome. People hold the door for each other in public places and many attend worship services.”

While the soft influence of kindness and politeness can be appealing to investors, it is the robust talent pipeline and education on offer in Nashville that has enticed companies such as Oracle and Amazon to locate offices there.

Indeed, in 2021, Oracle paid nearly $254m for a 24-hectare riverfront site in Nashville and the investment is expected to create approximately 8,500 jobs. Similarly, Amazon invested in an office in Nashville in 2018 and is looking to expand with two new office buildings – to be completed in 2023 – that will be equal to 90,000m2 of office space and create a further 5,000 jobs.

Nashville has approximately 124,000 university students enrolled and 20 colleges, including Vanderbilt, which ranked at 13 – higher than Ivy League Cornell and tied with Brown – in the National Universities ranking by US News in 2022.

Nashville's strengths in healthcare and manufacturing

Beyond music and tech, a key industry for Nashville is healthcare. “We are the home of for-profit healthcare in the US,” says Odom.

There are 18 publicly traded hospital companies based in Nashville, including the headquarters for Brookdale (the largest US senior living company). According to the 2019 Healthcare Council Economic Impact Study, Nashville’s healthcare ecosystem is worth approximately $67bn annually.

“People tend not to think about Nashville and the healthcare industry, but it truly is our largest industry, by employment, with about 167,000 people employed,” says Odom.

Another key industry for Nashville is manufacturing, with Odom highlighting a legacy in the automotive subsector. Nissan, Volkswagen and General Motors all have sites in and around Nashville city. Smyrna, a small town outside of Nashville, has been home to a Nissan production plant since 1983 and had the highest annual capacity in North America in 2017 with approximately 640,000 cars produced.

The large investments going into electric vehicle (EV) manufacturing following US President Joe Biden’s Inflation Reduction Act (IRA) offer Nashville and its automotive subsector promising opportunities.

“There is definitely excitement around what impact [the IRA] will have in our electric vehicle industry," says Odom. "We see several electric vehicle-related prospects. We have seen that activity increase in the Nashville region and I think Tennessee as a whole will benefit from that legislation.”

Indeed, this investment in EVs could provide a major boost to a legacy industry for the whole of Tennessee. Nashville's global reputation may be based around the music industry, yet it is areas such as automotive manufacturing and healthcare that are the less-heralded secrets of the city's success.

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