Tennessee cap evidence: what can actually be compared
Nashville’s Q2 2026 cap evidence differs by publisher: Northmarq reports a 5.1% transaction average; Matthews publishes 5.44% in a separate investment series. They are not two estimates to average. Memphis has useful operating research here, but no verified current cap sample. Tennessee pricing requires matching geography, property cohort and income convention.
“Cap rates have held essentially flat near 5.44% for two years.”
Matthews · Nashville Q2 2026. Matthews’ description of its own Nashville series, not a consensus measure or a Tennessee forecast.
A capitalization rate is annual net operating income divided by property price, before debt. A published cap metric helps select comparables; it cannot establish the subject property’s income or condition.
Dated evidence, not a statewide average
Original display. The numeric scale starts at zero and ends at 10%. Historical, asking and transaction observations retain their labels; missing data is not zero.
| Geography / asset | Period | Reported cap | Basis and limits |
|---|---|---|---|
| Nashville · Northmarq | Q2 2026 | 5.1% | Published transaction average. Down 20 bps year; cap count and NOI basis undisclosed. |
| Nashville · Matthews | Q2 2026 page | 5.44% | Separate published cap series. Aggregation window, cap sample and NOI convention not specified; do not blend with Northmarq. |
| Memphis, Knoxville, Chattanooga and Clarksville | October 2026 review | Current cap not verified | Coverage gap. Operating indicators and construction reports are not sale-cap evidence. |
The Nashville figures differ by 34 basis points. That difference is a methodology question, not an arbitrage opportunity. Northmarq’s quarterly average also differs from its first-half median-price cohort. A lower regional median price can reflect which properties sold rather than a decline in every building’s value. Keep each source’s date and cohort beside its figure.
One percentage point = 100 basis points. Multiple publishers sharing a dataset do not create independent confirmation. Asking caps, reported-sale medians, averages and modeled county indexes must remain distinct.
The local decisions behind the cap rate
| Market / measure | Period | Value | Boundary |
|---|---|---|---|
| Nashville · Northmarq vacancy | Q2 2026 | 7.8%; −80 bps quarter | Publisher universe; not comparable to Matthews without a boundary crosswalk. |
| Nashville · Matthews vacancy / effective rent | Q2 2026 | 5.40% / $1,612 per month | Separate universe; effective rent differs from Northmarq asking rent. |
| Memphis · MMG occupancy | Q2 2026 | 86.2%; −65 bps year | Occupied units do not establish collections. |
| Memphis · MMG absorption / completions | Q2 2026 | 1,175 / 1,002 units | Trailing four quarters, not Q2-only demand or supply. |
| Knoxville · MMG occupancy / annual rent change | Q2 2026 | 93.3% / −1.7% | Published operating sample; no local cap inferred. |
| Chattanooga · MMG occupancy / active pipeline | Q2 2026 | 92.2% / 1,557 units | Pipeline is active stock, not deliveries in one quarter. |
Nashville: improving leasing is not one agreed cap trend
Observed evidence and boundary. Northmarq describes quarterly compression; Matthews describes a largely stable separate cap series. Their vacancy and rent definitions also differ.
Different populations can look like confirmation of a broad repricing. Use the same source and cohort through time, then test whether it resembles the acquisition.
Direction. Editorial interpretation: income stabilization is supportable as a working thesis; automatic cap compression is not. Request the subject’s effective-rent bridge before capitalizing marketed asking-rent increases.
What would change the view. Seasonal improvement could fade. A different institutional sales mix could change the average without repricing the same assets. Continued collections and comparable closings would strengthen the case.
Before underwriting. Reconcile concessions, delinquency and renewals; obtain sale income for comparable vintage and location. Keep cap movement separate from the subject’s NOI change.
Evidence: Northmarq · Nashville Q2 2026, pp. 1–4 · Matthews · Nashville Q2 2026. Retrieved October 19, 2026. Interpretations and property decisions are RentalCalcs analysis.
Franklin/Brentwood and Hermitage/Mount Juliet/Lebanon: locate remaining competition
Observed evidence and boundary. Matthews identifies concentrated construction exposure in these corridors, compared with thinner pipelines in South and Southeast Nashville.
A metro supply slowdown can coexist with a busy delivery calendar around one building. New communities can compete through amenities and inducements even when asking rents exceed an older property’s.
Direction. Editorial interpretation: test the first renewal cycle against delivered competitors, rather than importing a metro annual forecast. The rent premium must survive the net cost of leasing incentives.
What would change the view. Delayed projects would reduce immediate competition. Concentrated openings could instead make the metro trend an optimistic guide.
Before underwriting. Map completion dates by floor plan and driving catchment. Carry concessions and turnover through the overlap; compare achieved rent after all inducements.
Evidence: Matthews · Nashville Q2 2026. Retrieved October 19, 2026. Interpretations and property decisions are RentalCalcs analysis.
Memphis: recovery starts from a different occupancy base
Observed evidence and boundary. MMG reports improving quarterly occupancy while annual occupancy remains lower. Demand exceeds deliveries in its trailing-four-quarter totals.
A shrinking future pipeline helps, but existing vacant units still need tenants. Funding them belongs in acquisition cash, not stabilized NOI assumed on day one.
Direction. Editorial interpretation: prioritize collections and stabilization runway over a headline yield. A low price on projected rent may still require substantial cash before that rent arrives.
What would change the view. Persistent delinquency or competing vacant stock could delay stabilization without new construction. Sustained net collections would weaken the cautious case.
Before underwriting. Obtain leases, arrears, deposits, turn budgets and monthly cash through breakeven occupancy. Request Memphis sale-cap income; do not import Nashville’s average.
Evidence: MMG · Memphis Q2 2026. Retrieved October 19, 2026. Interpretations and property decisions are RentalCalcs analysis.
Knoxville: a smaller future pipeline does not erase current projects
Observed evidence and boundary. MMG reports 93.3% occupancy and a 1.7% annual rent decline in Q2. Active construction is concentrated in Western Knox County and North Knoxville.
Downtown and Maryville/Alcoa face a different near-term supply setting from those construction corridors. A decline in starts affects later competition, while buildings already underway still compete for today’s tenants.
Direction. Editorial interpretation: distinguish a quarterly rebound from recovered annual pricing. A property in a delivery corridor needs more conservative net leasing assumptions than a supply-light catchment.
What would change the view. MMG expects relief as starts slow, but delayed projects can shift the competitive window into the next lease cycle. Strong concession-free renewals would weaken the cautious view.
Before underwriting. Obtain the actual completion calendar and renewal concessions for competing floor plans. Reconcile student and conventional tenancy separately where relevant; no Knoxville cap is inferred from occupancy.
Evidence: MMG · Knoxville Q2 2026. Retrieved October 19, 2026. Interpretations and property decisions are RentalCalcs analysis.
Chattanooga: recent absorption and a renewed construction test
Observed evidence and boundary. MMG reports 92.2% occupancy in Q2, with 1,236 units absorbed against 377 deliveries over the trailing four quarters. The active pipeline is 1,557 units.
Recent demand exceeded a relatively light completion flow. The larger pipeline means that experience cannot simply be extrapolated through the hold without checking when projects will open.
Direction. Editorial interpretation: operating stabilization is a reasonable starting thesis, with a separate stress for the next delivery wave. Keep future net rent and required sale yield as independent assumptions.
What would change the view. Delayed openings or stronger net leasing would support the thesis. More incentives or slower collections would undermine it before a market cap statistic changes.
Before underwriting. Map the next four quarters of competing openings, compare collected renewal rents and obtain local closing income. Nashville’s cap evidence does not substitute for Chattanooga sale comparables.
Evidence: MMG · Chattanooga Q2 2026. Retrieved October 19, 2026. Interpretations and property decisions are RentalCalcs analysis.
Secondary markets and missing evidence
| Market | Coverage | Remaining gap |
|---|---|---|
| Nashville metro and selected corridors | Two separate pricing perspectives and supported construction distinctions. | No neighborhood cap series or reconciled publisher-universe crosswalk. |
| Memphis | Dated leasing, demand and supply observations. | Current matched sale-cap evidence and subject collections. |
| Knoxville / Chattanooga / Clarksville and other counties | Knoxville and Chattanooga Q2 operating evidence and distinct supply mechanisms; directory identifies Clarksville reports. | Current local cap samples remain unverified; Clarksville and other markets need a complete local comparable review. |
No neighborhood cap is assigned without matching neighborhood evidence. Missing evidence is a reason to obtain more comparables, not to add an arbitrary geographic spread.
Three cap-rate paths, and the evidence each needs
Nashville and Memphis need different recovery assumptions. Nashville sources describe improving leasing from different measured starting points; Memphis has a larger remaining occupancy problem. Falling pipelines change future competition, not the rent missing from existing vacancies.
Publisher views differ: Northmarq emphasizes Nashville fundamentals and transaction composition; Matthews highlights pricing resilience and pipeline concentration; MMG frames Memphis as moving past its supply peak. Provider independence is not established for every series. These are distinct perspectives, not three independent confirmations.
RentalCalcs interpretation: use documented income as the base and fund the transition to higher stabilized NOI. A constant cap can still produce growth through collections. Better operating news alone does not justify a statewide yield decline.
Compression: leasing gains become durable collections
Concession-free occupancy and a broader financed buyer pool could reduce yields for stabilized assets.
Watch: Renewals, collections and matched sales separately for each metro.
Invalidated or weakened by: Returning concessions, higher debt costs or uncollected billed rent.
Underwriting consequence: Keep tighter pricing as upside; the bid must work without it.
Stabilization: supply easing offsets buyer costs
Absorption may improve income while taxes, insurance and debt prevent meaningful cap repricing.
Watch: Net margin, actual debt quote and competing delivery dates.
Invalidated or weakened by: Collection deterioration or matched repricing beyond sales-mix changes.
Underwriting consequence: Use a stable-cap base and separately fund leasing and initial work.
Expansion: local lease-ups or financing erode the bid
Remaining corridor supply or delayed Memphis stabilization can combine with higher buyer costs to increase required yields.
Watch: Turnover downtime, effective rent, arrears and lender proceeds.
Invalidated or weakened by: Sustained income improvement and multiple comparable closings at firmer yields.
Underwriting consequence: Stress lower NOI and wider caps together; lower leverage or price if cash is insufficient.
These are conditional RentalCalcs scenarios, not publisher probability forecasts or basis-point targets. Policy rates, Treasury yields, lender spreads and the borrowing constant are different inputs. No policy-rate cut is assumed to pass through automatically to property debt.
What a wider cap does to your property value
Value = annual NOI ÷ (cap rate ÷ 100). At constant income, a higher cap reduces value. A move from 5% to 6% is +100 bps and a 16.7% value decline, not a 1% decline.
From this market evidence to an offer
- Choose the metro and income cohortKeep Nashville series separate; leave unsupported local caps blank until matched comparables are obtained.
- Fund the path to collectionsSchedule concessions, vacancies, turns and arrears by month. Insert buyer taxes and an actual commercial insurance quote.
- Separate the source of returnShow value from NOI, sensitivity to exit cap and cash after debt and reserves. Do not make compression rescue a weak budget.
Hypothetical assumptions. NOI change is cumulative over your chosen holding period, not an annual growth rate. Results exclude debt, sale costs, taxes and interim cash flow.
Starting value $3,000,000
Exit value $3,011,250 (+0.4%)
$219,000 starting NOI at 7.3% → $240,900 exit NOI at 8%. NOI must change by 9.6% to preserve starting value at this exit cap rate.
Fixed reference matrix: your income has to offset the multiple
| Total NOI change | 6.80% exit | 7.30% exit | 7.80% exit | 8.30% exit |
|---|---|---|---|---|
| -10% total NOI | -3.4% | -10.0% | -15.8% | -20.8% |
| 0% total NOI | +7.4% | 0.0% | -6.4% | -12.0% |
| +10% total NOI | +18.1% | +10.0% | +2.9% | -3.3% |
| +20% total NOI | +28.8% | +20.0% | +12.3% | +5.5% |
This fixed matrix does not change when you edit the interactive tool. No selling costs, tax, debt payoff or interim cash flows are included. Total NOI growth is cumulative, not annual. Use a full cash-flow model for an investment return.
A buyer budget that reconciles before the debt
Hypothetical 24-unit acquisition at $3,000,000, with $1,450 scheduled monthly rent per unit. These assumptions illustrate a process; they are not market rents, quoted insurance or a forecast for any property.
Hypothetical conventional apartment purchase. Test concession-heavy renewals, buyer taxes and a longer stabilization period; no market cap is implied.
| Budget line | Annual amount |
|---|---|
| Scheduled apartment rent | $417,600 |
| Other recurring income | $6,000 |
| Vacancy / concessions / collection loss | −$42,000 |
| Effective gross income | $381,600 |
| Buyer property taxes | −$46,000 |
| Insurance allowance | −$26,000 |
| Owner-paid utilities | −$22,000 |
| Recurring maintenance | −$32,000 |
| Management | −$26,000 |
| Administration / licenses / other recurring | −$10,600 |
| NOI before financing and reserves | $219,000 |
Going-in cap: 7.30%. Immediate work of $180,000 is capital spending outside NOI; recurring repairs are already included above. An annual $12,000 replacement reserve is deducted below NOI in this example.
| Measure | Result / assumption |
|---|---|
| Loan / interest / amortization | $1,800,000 / 6.5% assumed / 30 years; monthly amortizing payments, no interest-only period |
| Annual principal and interest | $136,527 |
| Replacement reserve outside NOI | $12,000 |
| Cash flow after debt and reserves | $70,473 |
| Down payment + closing + initial work | $1,200,000 + $60,000 + $180,000 = $1,440,000 |
| Cash-on-cash, before income tax | 4.89% = cash flow ÷ total invested cash |
| DSCR, before / after replacement reserve | 1.60× / 1.52× |
| Debt yield, before / after replacement reserve | 12.17% / 11.50% |
The interest assumption is not a current loan quote. DSCR = the stated NOI numerator ÷ annual debt service; debt yield = the stated numerator ÷ loan principal. Lenders may deduct reserves or make other adjustments. Closing and initial work are funded from cash; no extra initial reserve deposit is assumed. If a lender requires one, add it to invested cash. Yield on cost requires a separately defined stabilized NOI and total project basis; it is not the going-in cap.
How much room does this buyer actually have? The amortizing loan constant is 7.58%: annual debt service divided by loan principal. Compare that payment burden with the 7.30% going-in cap, rather than comparing the cap only with the interest coupon. In this example, adding leverage reduces current equity cash yield before tax.
With debt service and reserves fixed, an annual NOI reduction of $70,473 (32.2%) would consume the remaining cash flow. This is an NOI stress, not the same percentage decline in rent; rebuild income and expenses separately.
Classify the apartment correctly for Tennessee tax
The Comptroller places dwellings with two or more rental units in the commercial/industrial class, assessed at 40% of appraised value. That is an assessment ratio, not a tax rate. Confirm appraisal timing, local levies and any PILOT agreement.
Evidence: Tennessee Comptroller · assessment glossary. Retrieved October 19, 2026. Interpretations and property decisions are RentalCalcs analysis.
Verify Nashville landlord and occupancy records
Metro Codes lists landlord registration, renewal and use/occupancy services. Obtain actual property records and resolve open issues. A directory does not certify compliance or establish Memphis requirements.
Evidence: Nashville Codes · services. Retrieved October 19, 2026. Interpretations and property decisions are RentalCalcs analysis.
Quote catastrophe and interruption terms
Tennessee’s business disaster guidance links insurance and recovery resources. Do not budget disaster assistance as guaranteed proceeds. Obtain commercial flood, seismic where relevant, wind, ordinance and business-income terms for the building.
Evidence: Tennessee Emergency Management · business resources. Retrieved October 19, 2026. Interpretations and property decisions are RentalCalcs analysis.
Free worksheet: turn unknowns into document requests
The printable worksheet gives you room to record the source, date and buyer adjustment for every income, expense, capital and exit assumption. It includes this edition’s local checks.
For a full property model, use the multifamily calculator. The single-family calculator supports a separate 1–4-unit workflow. These links do not transfer this page’s inputs; re-enter and verify your assumptions.
Compare local screening context: Davidson County · Shelby County. County rent-to-price screens are modeled indexes, not matched closed-sale NOI caps. Explore the Tennessee market directory.
Questions before an offer
Why are there two Nashville cap figures?
They come from separate series with unreconciled sampling and income conventions. Their 34-basis-point difference should not be averaged.
Can Nashville price a Memphis property?
No. Memphis needs its own sale-income comparisons; operating data here does not establish a current local cap.
Is the 40% assessment ratio a tax rate?
No. Apply the local levy to the assessor’s taxable basis after confirming classification and any parcel agreement.
Source ledger, dates and refresh rules
Research retrieved October 19, 2026. Observations, publisher outlooks and our conditional interpretation are labeled separately. This ledger summarizes publicly available research; it does not redistribute proprietary report datasets. Brokers may be selling services or properties; appraisal commentary is not a guarantee of future pricing.
Northmarq · Nashville Q2 2026, pp. 1–4
Geography: Publisher Nashville metro. Period: Q2 / H1 2026. Published: 2026-09-11. Accessed: 2026-10-19.
Property scope: Multifamily apartments. Class: As identified in observation; otherwise undisclosed. Substantive review: 2026-10-19.
Provider: Northmarq; vacancy CoStar; rents Yardi; sales CoStar. Measure: Quarterly transaction cap and leasing context. Statistic: Publisher-reported observation.
NOI convention: Not disclosed; do not assume trailing or forward NOI. Sample: Public report; metric-specific cap count not disclosed unless stated. Weighting: Not disclosed; do not combine publisher universes.
Limits: Cap sample weighting and NOI undisclosed; H1 median-price mix is not the quarterly cap sample. Refresh: Next quarterly edition, source correction or material rule change.
Matthews · Nashville Q2 2026
Geography: Publisher Nashville metro / submarkets. Period: Q2 2026. Published: 2026-08-17. Accessed: 2026-10-19.
Property scope: Multifamily apartments. Class: As identified in observation; otherwise undisclosed. Substantive review: 2026-10-19.
Provider: Matthews; provider not identified on public page. Measure: Separate cap, effective-rent and construction perspective. Statistic: Publisher-reported observation.
NOI convention: Not disclosed; do not assume trailing or forward NOI. Sample: Public report; metric-specific cap count not disclosed unless stated. Weighting: Not disclosed; do not combine publisher universes.
Limits: Unreconciled universe and cap window; do not blend with Northmarq. Refresh: Next quarterly edition, source correction or material rule change.
MMG · Memphis Q2 2026
Geography: Publisher Memphis market, potentially cross-state. Period: Q2 / trailing four quarters 2026. Published: Not stated. Accessed: 2026-10-19.
Property scope: Multifamily apartments. Class: As identified in observation; otherwise undisclosed. Substantive review: 2026-10-19.
Provider: MMG; provider not stated on public summary. Measure: Occupancy, demand and supply context. Statistic: Publisher-reported observation.
NOI convention: Not disclosed; do not assume trailing or forward NOI. Sample: Public report; metric-specific cap count not disclosed unless stated. Weighting: Not disclosed; do not combine publisher universes.
Limits: No cap extracted; occupancy is not collections. Refresh: Next quarterly edition, source correction or material rule change.
MMG · market report library
Geography: Multiple markets. Period: Directory checked October 19, 2026. Published: Rolling. Accessed: 2026-10-19.
Property scope: Multifamily apartments. Class: As identified in observation; otherwise undisclosed. Substantive review: 2026-10-19.
Provider: MMG. Measure: Coverage discovery. Statistic: Publisher-reported observation.
NOI convention: Not disclosed; do not assume trailing or forward NOI. Sample: Public report; metric-specific cap count not disclosed unless stated. Weighting: Not disclosed; do not combine publisher universes.
Limits: Not a quantitative local cap source. Refresh: Next quarterly edition, source correction or material rule change.
Tennessee Comptroller · assessment glossary
Geography: Tennessee; local administration. Period: Current guidance. Published: Not stated. Accessed: 2026-10-19.
Property scope: Property guidance; not a cap observation. Class: Not applicable. Substantive review: 2026-10-19.
Provider: Tennessee Comptroller. Measure: Rental classification and assessment ratio. Statistic: Official guidance.
NOI convention: Not applicable. Sample: Not applicable; official guidance, not market sampling. Weighting: Not applicable.
Limits: Local appraisal, levy and parcel agreements required. Refresh: Material rule change, revised guidance or parcel-specific confirmation.
Nashville Codes · services
Geography: Nashville / Davidson County. Period: Current directory. Published: Not stated. Accessed: 2026-10-19.
Property scope: Property guidance; not a cap observation. Class: Not applicable. Substantive review: 2026-10-19.
Provider: Nashville / Davidson County government. Measure: Landlord and occupancy checks. Statistic: Official guidance.
NOI convention: Not applicable. Sample: Not applicable; official guidance, not market sampling. Weighting: Not applicable.
Limits: Does not certify compliance or other city rules. Refresh: Material rule change, revised guidance or parcel-specific confirmation.
Tennessee Emergency Management · business resources
Geography: Tennessee. Period: Current guidance. Published: Not stated. Accessed: 2026-10-19.
Property scope: Property guidance; not a cap observation. Class: Not applicable. Substantive review: 2026-10-19.
Provider: Tennessee Emergency Management Authority. Measure: Insurance and recovery resources. Statistic: Official guidance.
NOI convention: Not applicable. Sample: Not applicable; official guidance, not market sampling. Weighting: Not applicable.
Limits: Not a binder, premium quote or assistance guarantee. Refresh: Material rule change, revised guidance or parcel-specific confirmation.
MMG · Knoxville Q2 2026
Geography: Publisher Knoxville market / local submarkets. Period: Q2 / trailing four quarters 2026. Published: Not stated. Accessed: 2026-10-19.
Property scope: Multifamily apartments. Class: As identified in observation; otherwise undisclosed. Substantive review: 2026-10-19.
Provider: MMG; provider not stated on public summary. Measure: Occupancy, rent and construction concentration. Statistic: Publisher-reported observation.
NOI convention: Not disclosed; do not assume trailing or forward NOI. Sample: Public report; metric-specific cap count not disclosed unless stated. Weighting: Not disclosed; do not combine publisher universes.
Limits: No cap extracted; pipeline, starts and deliveries are distinct. Refresh: Next quarterly edition, source correction or material rule change.
MMG · Chattanooga Q2 2026
Geography: Publisher Chattanooga market, potentially cross-state. Period: Q2 / trailing four quarters 2026. Published: Not stated. Accessed: 2026-10-19.
Property scope: Multifamily apartments. Class: As identified in observation; otherwise undisclosed. Substantive review: 2026-10-19.
Provider: MMG; provider not stated on public summary. Measure: Occupancy, demand, deliveries and active pipeline. Statistic: Publisher-reported observation.
NOI convention: Not disclosed; do not assume trailing or forward NOI. Sample: Public report; metric-specific cap count not disclosed unless stated. Weighting: Not disclosed; do not combine publisher universes.
Limits: No local cap inferred; metro scope is not Tennessee-only. Refresh: Next quarterly edition, source correction or material rule change.
Refresh the affected figures and interpretation together when a new edition, correction or material operating rule appears. A retrieval or rebuild is not a new observation. Report a correction through RentalCalcs contact, including the source, edition, geography and affected claim.