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How Knoxville’s Commercial Real Estate Market is Performing in 2017

By | May 02, 2017

4 trends impacting the Knoxville Commercial Real Estate Market in 2017

At DPM Care, we’ve called Knoxville home for 20 years. So we know firsthand what a great place to live and work it is. Knoxville offers the perfect combination of big-city and small-town living. And it seems the word is getting out.

Knoxville has experienced healthy growth over the past few years, attracting new residents and businesses. The city’s population jumped by more than 7,000 people in the past two years—making Knoxville the second fastest-growing city in Tennessee (next to Nashville).

World Population Review states:

“Knoxville is among the ten fastest-growing U.S. cities with the best employment outlook in the country”.

While Movoto says:

“Knoxville, Tennessee is widely regarded as one of the most popular up-and-coming cities in the Southeastern United States.”

4 Things to Know About Knoxville’s Commercial Real Estate Market

There are a lot of great things happening in Knoxville. And that’s driving continued growth in the commercial real estate market. Here are four trends we’re seeing:

1. Steady Growth with Areas of Strong Opportunity

While commercial real estate in Knoxville hasn’t seen any huge spikes over the past few years, it has been steadily growing. Data from Loopnet shows office, industrial, and retail asking prices and rental rates in Knoxville have all been on the rise overall since 2015.

In this report from Pinnacle Financial Partners, Tom Vester, a Commercial Real Estate Manager in Knoxville, states: “the overall market is strong with low vacancies”. He notes that various building renovations have been a boom for Downtown and there are retail growth and investment opportunities in different pockets of the city.

Vester also sees opportunities in south Knoxville, which he says “is growing into a larger suburban alternative to living on the north side of the river. Growth there won’t be explosive, but it should be steady and reliable for some time to come.”

2. Housing Market Gaining Increasing Momentum

Business and commercial real estate is tied in many ways to the local housing market. This is another area where Knoxville is on the rise.

Zillow ranked Knoxville #7 on its list of the top 10 hottest housing markets of 2017. Knoxville earned the rankings based on its rising home values, low unemployment rates and strong income growth. Knoxville home values have gone up 6.5% over the past year and Zillow predicts they will rise 3.1% within the next year

3. Thriving Economy Driving Commercial Demand

The Leaf Chronicle reported in December that Knoxville was among the top 25 U.S. cities for job growth between October 2015 and October 2016. Over that span, the number of jobs in Knoxville increased from 384,235 to 402,262. Joblessness currently sits at 4.7 percent (below the 4.9 percent national average).

In this Knoxville News Sentinel article, Blue Ridge Reality President Louise Frazier says of the Knoxville commercial market: “Companies are doing well. They have some money and they are willing to invest in space and longer terms. They are more confident about looking at what the space needs for their company will be over the next five to 10 years.”

4. Potential New Space and Notable Business Expansions

One recent development that could have an impact on the Knoxville commercial real estate market in the near future: Knox County is accepting sales proposals from developers for the historic Andrew Johnson Building.

Knox County Mayor Tim Burchett said the building’s location in booming Downtown should make it a big draw for developers. He also plans to let the market dictate whether the 18-story building will be used for residential units, office space, retail, or a mix.

Elsewhere, some of the notable Knoxville business expansions announced in the past 12 months include:

  • LeMond Composites is investing $125 million to expand its campus in Oak Ridge;
  • HTS International Corporation will invest $21.4 million to establish its global headquarters in Pellissippi Corporate Center;
  • Magnum Venus Products will invest $11.9 million to build a new facility in Hardin Business Park;
  • TeamHealth is investing $6.7 million to expand its Knoxville headquarters; and
  • KaTom Restaurant Supply Inc. will build a $3 million, 10,000-square-foot expansion to its 100,000 square-foot Knoxville facility.

Knoxville’s Commercial Market Set to Remain Solid for Next Few Years

All of the above information tells us there’s a lot of room for optimism with the Knoxville commercial real estate market these days. As the city continues to grow and attract new residents, Knoxville’s business community is likely to expand with it.