The state of Tennessee has a population of 6,038,803 spread out across over 41,217 square miles. The population has been rising steadily over the past two decades. Between 1990 and 2000 the population rose 6.2%, and since 2000 that rate has held steady. The per capita income of the residents of Tennessee is $30,645.

What does this mean for those who are interested in commercial real estate in Tennessee?

The largest city in Tennessee is Memphis. This city is conveniently located by the Mississippi River and nine major highways which makes it ideal for transportation and shipping commerce. Not surprisingly, the industrial market in Memphis is picking up momentum. What may be surprising is that the primary movement in this market is among small and mid-sized industrial tenants. It is mom and pop shops and light industrial manufacturers who are causing absorption rates to drop. In Nashville, the industrial market is tight, and some tenants are actually leaving for lack of industrial space. Nashville industrial space seems to be burdened with high taxes and operating costs and unfriendly zoning. Instead, the industrial market is booming in outlying areas such as Rutherford, Sumner, Maury and Wilson. These counties are bagging manufacturing jobs and expanding their industrial complexes.

The retail market in Memphis is strong due to redevelopment in the southern parts of the city. Like many aging cities, Memphis is trying to revitalize its urban core. There is active development of both small retail pads and shopping complexes for big box anchor tenants. The city has an active nightlife and in those areas, retail is strong, but the major activity is leasing rather than purchase or development.

Nashville is the state's capital, the country music capital of the United States, and the second largest city in Tennessee. Commercial real estate is used for the recording industry, music venues and businesses that cater to the 5 million tourists that visit the city each year. Besides retail, office or flex use properties are both hot in Nashville, which boasts a large medical sector.

Just outside of Nashville in Murfreesboro, housing is booming on account of steady population growth. New development is springing up all over the place, with a particular emphasis on what's called "new urban." New urban incorporates small neighborhood or village planning rather than large scale master-planned communities that typify suburban development. In "new urban" developments there is often close cooperation with retail developers, and small-scale retail usually gets developed alongside the housing rather than following it.