Nashville real estate sees condos in high demand for starter homes, luxury rentals

Every time Parker Dotson made his weekly visit to the bank in the Gulch, he joked with the teller he should move in next door.

Now, he's doing just that.

Dotson, a small business owner in Nashville, is making his first-ever real-estate purchase before the forthcoming Pullman Gulch Union condo tower is even finished. He joins 99 other buyers who secured contracts during the building's presale period.

Why is the demand so high to get into a downtown condo building with units ranging from mid-$400,000s to $3 million each?

For Dotson, it's about trading in his 10 years of renting to become a homeowner. And the condo was an entry-level way for him to make his first real-estate purchase.

"I’m actually excited to have an HOA and be an owner," Dotson said. "I’m tired of throwing money down the drain and just being a tenant."

Condominium buildings in the downtown core of Nashville have skyrocketed in popularity over the past decade as more people opt into the lifestyle that comes with condo ownership. The demand has spurred more developers to build condo communities, including those on the ultra-luxury side of the spectrum.

This year, the number of condo sales has increased steadily each month. Greater Nashville Realtors reports sales of 250 condos in January more than doubled to 540 closings in May. The median price of $349,360 per unit rose slightly to $351,000 from January to May.

Jack Gaughan, Greater Nashville Realtors' vice president of member engagement, said demand for condos has grown, in part, due to businesses setting up offices in Nashville and bringing in high-earning executives. That demand has combined with more interest from young professionals who are gravitating to the evolving downtown lifestyle.

"How do we open up that door to that buyer market?" Gaughan said. "People moving from Chicago, New York, LA, who are looking to live in a more urban environment. They want to walk to dinner or go meet their friends at a bar."

At Pullman Gulch Union, many different types of buyers are attracted to the range of home prices — from people buying real estate for the first time to those expanding their luxury real estate portfolio.

High interest in new Gulch condo tower from boomers, Gen X and millennials.

Before it even opens, one hundred condo units are under contract at the Pullman — representing $70 million in sales. Closings are set to begin in July.

Amenities at the 300-unit condo tower include a rooftop pool, a fitness center, resident lounges and pickleball courts. But the sales and development teams said the location is one of the most desirable aspects of the building.

The building was developed by Endeavor Real Estate Group and condo sales are led by Parks | Compass.

"We felt like there would be good demand from folks wanting to be in the Gulch," said Jamil Alam, managing principal at Endeavor. "We are, as a company, really big believers of walkability and sort of urban, mixed-use neighborhoods."

More condo buildings are catering to the desire for walkability and urban lifestyle in Nashville's downtown area. Pullman's strong presale period underscores that demand, according to the sales team.

Approximately 19% of downtown residents live in condos, and the age demographics of the 17,600 downtown residents is an almost equal split between baby boomers, Generation X and Millennials.

Data from the Nashville Downtown Partnership shows that the average price-per-square-foot in downtown condos has climbed steadily over the past decade, aligned with positive growth in the Nashville home market overall. In 2023, the average condo costs $785 per square foot.

Ultra-luxurious buildings like the Four Seasons Hotel and Residences come with a much higher price tag. One of the building's penthouse apartments recently sold for $15 million .

And more luxury living is on the way. Turnberry, the same developer behind the Nashville JW Marriott, plans a 46-story St. Regis hotel with for-sale condos. Developer SomeraRoad plans to make luxury condos a part of its Paseo South Gulch neighborhood in future construction phases.

At the Gulch Union development, a hotel with condo residences is planned by Endeavor.

"We’ve fallen in love with Nashville and particularly the Gulch and have enjoyed the relationships we’ve gotten to build there," Alam said. "We hope to continue to be able to build fun projects."

'Just enjoying the city life'

Condo buyers range from young professionals and first-time home buyers to older couples downsizing and those expanding their real-estate portfolio with a second home at the Pullman building, according to Sydney McCann, a leader on the Parks | Compass sales team for the Pullman building.

Of the people buying second homes, about half of them already live in Tennessee, while the other half are from out of state and want to own property in Nashville. Many of them have children who attend college or work in Nashville, McCann said.

"This building filled a void in our market," McCann said.

In the 37203 ZIP code of downtown Nashville, where the Pullman is located, there were 362 condo closings over the past 12 months with a median sales price of $662,450, according to data from the Greater Nashville Realtors. The only other downtown ZIP code with a higher median condo sale price over the same time period was 37201, along the Cumberland River.

The $450,000 price bar to enter the Pullman building means it can be an entry-level property for some buyers, including Dotson.

The 29-year-old owns Pinnacle Outdoor Design & Build and creates custom outdoor living spaces and swimming pools. While he grew up in a rural area of west Tennessee, Dotson loves the downtown Nashville lifestyle.

He enjoys frequenting restaurants in the downtown area and looks forward to participating in community events in the Pullman building.

“I love walking the Gulch,” Dotson said. “That’s one of my favorite things to do, is walk my dog Pepper. Just enjoying the city life.”

He also views the property as part of a long-term investment strategy. He purchased one of 60 lease permits to rent out his unit after living in it himself for a few years, and he wants to continue building out his real-estate portfolio from there.

“That’s why I bought that leasing permit, because I hope this will be part of my rental portfolio one day,” he said. “I feel really fortunate to be one of the 60 people who get to do that.”

Reporter Molly Davis covers growth and development in Nashville. Reach her at mdavis2@gannett.com .

This article originally appeared on Nashville Tennessean: Nashville real estate sees condos in high demand for starter homes, luxury rentals