CAP Rates For Apartment/Multifamily Properties in Nashville, Tennessee
Multifamily / Apartment Cap Rates
Rates as of: 08/15/2026
| Luxury Metro A Class | 4.70 |
| Luxury Metro B Class | 5.10 |
| Luxury Metro C Class | 5.64 |
| Suburban A Class | 4.75 |
| Suburban B Class | 5.18 |
| Suburban C Class | 5.65 |
| Value Added Acquisition | 6.86 |
Q2 2026 Multifamily Cap Rate Report
Updated August 10, 2026
Multifamily Cap Rates are Stable
In Q 2 2026, multifamily cap rates expanded an average of 5 bps for A and B Class properties due to rents slightly declining and remained stable for Class C properties where rents remained flat. Vacancy declined to 6.2% due to the positive absorption of new units. According to Freddie Mac, rents are now trending slightly downwards, net absorption of new units has slowed, and vacancies and rental concessions are declining. Despite these market conditions, sales prices have mostly held steady and investor optimism although measured is more confident than Q1 2026.
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Supply-Demand Rebalancing and Stable
After years of rising vacancy due to the substantial influx of 529,000 new multifamily unit starts in 2022, 2026 began with only 392,000 new units under construction as reported by The Association of Home Builders. This has resulted in increased absorption, a decrease in rental concessions and declining vacancy. With the combination of dwindling pipelines and the deceleration of new construction, supply and demand of units is rebalancing in a stable direction.
The Affect of High Interest Rates
It appears that due to the uncertainty of the Iran War, and continuing high oil prices, more investors are fleeing the stock market to the safety of treasury bonds. This raised the yield on the 10-year treasury bond which raised long-term interest rates and has slowed sales. This is expected to be a continuing trend which should raise multifamily cap rates as 2026 progresses.
Investing with a Long Term Hold Strategy Seems Prudent Today
Investing with a long-term hold strategy seems prudent today. Although the absorption of new units has improved along with vacancy and rental concessions, rents remain flat and inflation is on the rise. This will make it difficult to raise rents in the near future and slow the return on your investment. Therefore, a hold of 5 years or more is recommended.
Frequently Asked Questions About Capitalization / Cap Rates
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