It’s hard to ignore the parallels between the Live Music Capital of the World and Music City U.S.A. Both are capital cities that continue to draw in tourists as well as people looking to relocate.
Austin’s rapid growth and development started more than a decade ago, but it’s still continuing at a steady clip. While Nashville’s boom is more recent, it appears to be on the same trajectory.
“I would say Nashville started on a smaller scale and is growing at a similar rate,” says Courtney Ross, chief economic development officer for the Nashville Area Chamber of Commerce.
These five similarities between the two cities suggest that Nashville will continue to follow in the footsteps of Austin’s meteoric growth.
Cities in the Spotlight
While Austin has enjoyed its place in the limelight for well over a decade, Nashville’s designation as an “it city” is more recent, with GQ crowning the city “Nowville” in 2012.
“The show Nashville may have had something to do with it,” says Brian Copeland, chief engagement officer of Village Real Estate and president elect of the Tennessee Association of Realtors. He also points to a surge in country music’s popularity as possibly raising the city’s profile.
Whatever the reasons behind the growth, Nashville and Austin regularly come in near the top of various “best cities” lists. Most recently they appeared on Conde Nast’s rankings of friendliest cities (Austin – 4th, Nashville – 5th), Wallethub’s list of the best real estate markets (Austin – 5th, Nashville – 15th) and the Census Bureau’s rankings of cities with the largest median household income gains (Nashville – 1st; Austin – 12th).
The popularity of these cities is largely driven by their thriving tourism industries. Both cities have a tradition of local music acts, frequent listings in concert tour rotations and major music festivals like Austin’s SXSW and Nashville’s CMA Music Festival.
Both cities have also been steadily gaining recognition as great food destinations, with Travel + Leisure ranking Austin #12 and Nashville #11 in its “America’s Best Cities for Foodies” list.
Nashville also boasts a professional NHL team and a professional football team, both of which are big draws, notes Ross.
A Healthy Short-Term Rental Market
As cities become hot tourism destinations, their short-term rental markets also tend to experience a boom. Austin was no exception to this trend and saw many residents and property owners earning great rates by renting out rooms or homes throughout the year as well as during in-demand events like SXSW.
Nashville is enjoying a similarly hot market with several added factors contributing to the success of its short-term rentals. In addition to the city’s appeal to visitors, Copeland points out that Nashville also has a shortage of hotel rooms.
“If you were to go to the downtown Nashville Omni hotel and book a room on Friday night, you’re going to pay $613,” he notes. Although more hotels are being built, the current scarcity of traditional options is driving more people to look for accommodations on sites like Airbnb and VRBO.
Copeland does caution potential investors to be aware of emerging short-term rental regulations in Nashville. Austin has also grappled with regulations, initially leading the way in smart guidelines then adding more stringent rules that have threatened the vacation rental market.
It remains to be seen what path Nashville will follow, but potential investors should plan to work with a local realtor and an experienced vacation rental property manager who can help them successfully navigate any changing requirements.
Influx of Young People
Austin and Nashville are both enjoying steadily increasing population numbers. “We grow by about 80 people a day,” Ross says of Nashville. Austin’s rate of growth continues to tend upward, adding approximately 110 people each day in 2014 and 157 people each day in 2016, according to the Austin Business Journal.
In the same way Austin has attracted large numbers of young people, Nashville has seen significant growth among Millennials.
“This is a place where Millennials want to live. They can move here, find a job here and they can afford to live here,” says Ross.
While Austin’s cost of living may be steadily increasing, some of the city’s growth is still attributable to its affordability, especially compared to that of New York and cities in California. Nashville is still enjoying that appeal, with a cost of living index that was nearly 10 points under the national average in 2014.
Appeal to Businesses
Both Nashville and Austin have seen significant business growth, which leads to greater employment opportunities for the cities’ residents.
“There will be 65% projected employment growth in the Nashville region by 2040,” says Ross, who noted that business support services, technology, healthcare and automotive sectors are experiencing the fastest rates of growth.
What has attracted so many businesses to these cities? They each have favorable tax environments and low costs compared to other major business centers. Businesses also tend to go where the talent is, and both cities are home to plenty of qualified professionals as well large student populations. While most Austin students attend the University of Texas, Nashville’s student population is more spread out.
“We have Vanderbilt University and we also have 23 colleges and universities that combine to more than 117,000 students,” notes Ross.
Nashville also has a leg up in attracting businesses thanks to its central location in the country and the three major interstate systems that go through the city.
As both of these cities continue to grow, Nashville’s leaders have the advantage of being able to look at Austin’s journey and identify opportunities to learn from the city’s successes and challenges.
Ross points out that Nashville’s leaders are focusing on ways to improve transit options and maintain are affordable housing options for artists and musicians.
“We want to make sure we maintain what Nashville is, even as we grow,” she says.