Pipeline Pulls Back
Nashville's industrial market did not cool off in the third quarter — it digested. CBRE's Nashville Industrial Figures Report for Q3 2026, released October 9, shows tenants absorbed 2.74 million square feet even as developers delivered 3.83 million square feet. Vacancy rose 40 basis points to 5.4%. The number that matters for the next few quarters is under construction: it fell to 5.13 million square feet from 8.49 million in Q2. Demand is still here. The speculative wave is cresting.
Industrial: strong take-up, heavier supply
Availability also rose 40 basis points to 8.5%, and leasing volume ran 1.51 million square feet for the quarter. That is not a demand collapse. Absorption of 2.74 million square feet is the strongest of the three CBRE quarterly prints so far in 2026, after 552,000 square feet in Q1 and 1.8 million in Q2. Deliveries simply outran it: 144,000 square feet in Q1, 2.0 million in Q2, and 3.83 million in Q3.
Rents are still grinding higher. CBRE put the average asking rent at $10.21 per square foot in Q3, up from $7.98 three years earlier, and up from $10.14 in Q2. Over the past three years, the market has posted 16.59 million square feet of cumulative net absorption. The story is digestion of a large delivery cohort, not a sudden stop in tenant demand.
Source: CBRE Nashville Industrial Figures Reports, Q1–Q3 2026. Net absorption and deliveries in million square feet; vacancy rate (dashed) on right axis. Each quarter is plotted as originally reported; CBRE's Q3 quarter-over-quarter changes are measured against revised Q2 figures.
Office: occupancy steady, pipeline nearly empty
CBRE's companion Nashville Office Figures Report for Q3 paints a quieter picture. Net absorption totaled 152,000 square feet, down from 346,000 in Q2, keeping total vacancy steady at 17.7%. Availability eased 30 basis points to 23.3%. Leasing fell to 850,000 square feet from 1.46 million in Q2. Average asking rent rose to $37.30 per square foot.
The structural change is on the supply side. After 235,000 square feet of deliveries in the quarter, space under construction declined to just 60,000 square feet. Over three years, vacancy has eased from 19.1% in Q3 2023 to 17.7%, and asking rents have moved up from $33.56. Occupiers still have choices at 23.3% availability, but landlords are no longer staring at a large new-spec wave.
Rates still weigh on investment math
CBRE flagged elevated interest rates and roughly 5% Treasury yields as a headwind for investment activity. Federal Reserve H.15 data show the 10-year Treasury constant-maturity yield at 5.31% on October 5 and 5.22% on October 8. Freddie Mac's 30-year fixed mortgage average rose to 7.40% as of October 8 from 7.28% the week before. Cap-rate and refinance math still has to clear a high bar, even when occupancy fundamentals hold.
Middle Tennessee: product is still getting built — more selectively
Local industrial product is still moving through the pipeline, but the next wave looks more targeted. Groundbreak Nashville reported October 9 that Lincoln Property Company's Skybridge 40 — a 167,133-square-foot, two-building Class A project at 41 Rachel Drive in Donelson, across I-40 from Nashville International Airport — has building permits totaling more than $16.1 million. The shallow-bay design targets the 18,000-to-100,000-square-foot flexible segment Cushman & Wakefield is leasing, with delivery expected by late 2026 or early 2027.
That sits alongside last week's Lebanon construction loan for INDUS's first speculative cross-dock: capital is still funding well-located industrial, but underwriting will track the vacancy and availability climb CBRE just printed.
Residential backdrop: September was flat, not free-falling
For owners watching the for-sale housing side of Middle Tennessee, Greater Nashville REALTORS' September data (nine counties) showed 2,885 total closings, essentially flat with 2,881 a year earlier, per the association's release as reported by the Nashville Post. Residential closings were 2,284 at a $510,000 median, with 10,462 residential listings on the market and 57 days from list to contract. In Rutherford County, Turner Victory Team's Realtracs recap put September closings at 409, down 11% from 461 a year earlier, with a median sale price of about $420,000. Residential softness does not dictate industrial rents, but it is part of the same rate environment CBRE tied to slower investment sales.
Key takeaways for Middle Tennessee owners and investors
Treat Q3 industrial vacancy as a digestion print, not a demand crash. Absorption hit 2.74 million square feet; deliveries of 3.83 million square feet drove the 5.4% vacancy rate.
Watch the pipeline, not just the vacancy. Under construction fell to 5.13 million square feet from 8.49 million in Q2. The next few quarters should see less new competition than the last two.
Lease assumptions still matter on new industrial. Availability at 8.5% and a heavy Q3 delivery slate mean tenants have options; pricing power is real but not unlimited at $10.21 asking.
Office landlords are in a different movie. Vacancy is stable at 17.7%, but with only 60,000 square feet under construction, the market is competing on existing and recently delivered space — including large sublease blocks already in play.
Investment and refinance math remains rate-bound. A 10-year near 5.2%–5.3% and a 7.40% Freddie 30-year benchmark keep pressure on exit caps and residential move-up demand.
Selective product still gets built. Infill and flexible industrial near BNA (Skybridge 40) and funded spec on the eastern corridor show where capital is willing to lean in.
Bottom line
Nashville industrial absorbed a strong quarter of tenant demand and an even stronger quarter of new buildings. The vacancy uptick is real; so is the sharp pullback in under construction. Office is stable with almost no new supply left in the pipe. For Middle Tennessee owners, the playbook is lease-up discipline on new industrial, patient positioning on commodity office, and refinance planning that assumes today's Treasury curve — not last year's.
Talk with the CBS Realty team about what these shifts mean for your property, lease, or next acquisition in Murfreesboro, Rutherford County, and greater Nashville. Contact CBS Realty
Hans Nelson is an Affiliate Broker with CBS Realty in Murfreesboro, Tennessee.
Sources
CBRE, Nashville Industrial Figures Report Q3 2026, Oct. 9, 2026
CBRE, Nashville Office Figures Report Q3 2026, Oct. 9, 2026
CBRE, Nashville Industrial Figures Report Q2 2026, July 9, 2026
CBRE, Nashville Industrial Figures Report Q1 2026
Federal Reserve Board, H.15 Selected Interest Rates, Oct. 9, 2026
Freddie Mac, Primary Mortgage Market Survey, Oct. 8, 2026
Groundbreak Nashville, "Skybridge 40 Industrial Project Under Construction Near BNA," Oct. 9, 2026
Greater Nashville REALTORS, Monthly Home Sales Report (September 2026), via greaternashvillerealtors.org / nashvillear monthly data
William Williams, "Home sales flat year-over-year," Nashville Post, Oct. 7, 2026
John Turner / Turner Victory Team, "September Home Sales in Rutherford County," Oct. 11, 2026
