Nashville’s commercial real estate market is facing distress that far exceeds the challenges seen in the residential sector, according to Moren Adenubi, owner and managing broker at Crown Realty Experts. Adenubi, who specializes in both commercial and residential real estate, says the current divergence signals structural changes in how commercial space is used, not just a temporary market slowdown.
“Absorption rates have increased. Days on market have increased over the last few months,” Adenubi says. “Retail has been hit very hard, so the retail market is tough right now.”
But Adenubi notes that retail is not alone in its struggles. The office sector, in particular, is now confronting a delayed crisis triggered by the widespread adoption of remote and hybrid work. What initially appeared to be a temporary response to the pandemic has now become a permanent reduction in office space needs.
The Office Space Contraction
Adenubi explains that the true extent of the office market’s decline is only now becoming clear. At the onset of the pandemic in 2020, many companies shifted to remote work, leaving office spaces empty. However, tenants continued to pay rent under existing lease obligations, which masked the decline in actual office usage.
“Office people do not need as many offices as they used to need,” Adenubi says. “In 2020, a lot of people went remote, so all the office spaces were sitting empty, but they continued to pay their rent because they were under a lease.”
This delayed the visible impact on vacancy rates. Landlords reported stable occupancy, but in reality, much of the space was unused. Now, as leases come up for renewal, companies are locking in smaller footprints to reflect their new hybrid or remote work policies.
“As the lease renewals are coming in now, what we’re seeing is people are moving into a hybrid situation, so they don’t need as much space as they used to need,” Adenubi explains. “And because of that, there’s been some vacancy.”
Adenubi emphasizes that this is not just a cyclical downturn. The shift to hybrid work is a permanent change in how companies operate, resulting in a lasting reduction in office space demand per employee. Even if the broader economy improves, office landlords will not see a full recovery in demand.
The Residential Contrast
While commercial properties struggle, Nashville’s residential market is showing resilience. Adenubi notes that the city’s population growth continues to drive housing demand. “On the multifamily side, we still need more houses, especially in the Nashville market, so I think we’re not going to see as many vacancies,” she says.
Although Adenubi acknowledges that “rents are falling,” she describes this as a necessary market correction rather than a sign of weak demand. The need for residential units remains strong, but rents have adjusted downward from their previous highs.
This distinction is critical for investors analyzing risk. Adenubi believes that residential distress will be limited to properties with excessive debt or poor management. “With falling rents and higher interest rates, we’re going to see some foreclosures in that arena as well, when people are not able to refinance or when they’re not able to purchase because the numbers don’t work,” she says.
In the residential sector, financial distress stems primarily from leverage and cash-flow issues, not from a lack of housing demand. In contrast, commercial real estate—especially office and retail—is being hit by both demand destruction and financial strain.
The Industrial Exception
Not every segment of commercial real estate is struggling. Adenubi identifies industrial properties as a bright spot in Nashville’s market. “Industrial. We will always have that,” she says. “That’s an outstanding market in the Nashville area, because we have quite a bit of industry here.”
Nashville’s location and established industrial base continue to attract logistics and manufacturing investment, supporting strong demand for industrial space. As a result, this segment is performing far better than the office or retail segments.
Investment Implications
For investors considering Nashville commercial real estate, Adenubi’s analysis underscores the importance of careful property selection. Passive investment strategies that depended on broad market appreciation no longer work in the current environment, particularly in the office and retail sectors.
“Christmas also gives an artificial jump, because people are doing a lot of buying,” Adenubi notes about retail. “So we’ll see the results of that again in January.” She suggests that any apparent improvement in retail metrics during the holiday season may quickly fade, revealing more profound underlying weakness in early 2026.
The broader takeaway is that commercial real estate investors must focus on property fundamentals and segment performance, rather than assuming rising values across the board. Properties that were marginal before the pandemic are now often unviable, while previously strong performers are only managing average returns.
Whether commercial landlords can adapt by repurposing office and retail properties or must accept permanently lower income will determine how severe Nashville’s commercial real estate correction becomes in the coming years. The market is now testing which properties and investors can withstand a new era of reduced demand and shifting space requirements.
