22 Oct Commercial Real Estate Trends in East Tennessee
The southeast saw tremendous growth in 2020, especially in the state of Tennessee. This has only increased over the years. East Tennessee, in particular, saw a large increase in population. Anytime a community sees growth like this, it brings new economic opportunities. The commercial real estate landscape in East Tennessee is one opportunity that continues to evolve for investors.
From the rise in demand for industrial spaces and multifamily developments to the evolving needs for office and retail spaces, understanding current trends is crucial for investors when making informed decisions about commercial real estate opportunities. Looking forward to 2025, there are several trends that real estate investors should consider when making plans for their portfolios.
At SVN | Wood Properties, we closely monitor key commercial real estate trends in East Tennessee and beyond, positioning our clients to achieve their goals and realize success.
East Tennessee’s Economic & Demographic Growth
The economic and demographic growth in East Tennessee has significantly impacted the commercial real estate market—particularly in key cities like Knoxville. Our region has experienced steady population growth due to the combination of affordability, quality of life, and expanding job opportunities—even making it on national lists of best places to live and to do business in. This increase in population isn’t going anywhere anytime soon with a 12.6% increase estimated between now and 2040.
The rise in new residents has increased demand for everything from housing to retail spaces, driving development in both urban and suburban areas. This population boom presents opportunities for investors to tap into markets where commercial real estate demand is set to continue increasing alongside residential growth.
Knoxville’s position as a growing urban hub makes it an attractive option for commercial real estate investments. Key sectors driving the region’s expansion include:
- Technology
- Healthcare
- Education
The University of Tennessee, Oak Ridge National Laboratory, and a thriving healthcare industry anchor the local economy. The result is a stable demand for office, industrial, and multifamily properties. This blend of demographic growth and economic diversification will continue strengthening East Tennessee’s position as a key market for commercial real estate investors going into 2025.
Current Commercial Real Estate Trends in East Tennessee
The way commercial properties are viewed and used has shifted after the pandemic. What that functionally looks like varies from industry to industry, but the fact of the matter is that our communities have adapted to socializing and working in different capacities than we did before 2020. Many companies are still trying to figure out the new normal of office life with work-from-home as a reality. Others have experienced so much growth that they’re looking for a new warehouse or larger industrial space. But what do you need to consider going into 2025?
Office Space Adaptations
Gone are the days of white and gray open-concept offices with an endless sea of cubicles and a water cooler. In a world where working from home is an option, most employees would rather choose that over working in a cubicle any day. This has presented a new challenge for office space (whether leasing, buying, or selling). It used to be that offices were a functional part of running a business. Now offices are rated more on whether they’re attractive to an employee or not.
Forbes highlights that the majority of the workforce (millennials and Gen Z) care about offices that are:
- Experiential
- Communal
- Purpose Built
- Convenient
The result of property owners embracing these trends is a creative use of traditional office space. This includes revitalizing historic buildings and collaborating with other local businesses for mixed-use spaces.
Increase in Industrial & Warehousing Demands
A rise in e-commerce has been a significant contributor to the need for more industrial and warehousing space. According to NAIOP, the Commercial Real Estate Development Association, decreased interest rates are projected to increase industrial leasing activity. With e-commerce requiring almost three times as much space as other retail spaces, this marks the perfect opportunity to invest in industrial and warehouse properties in the region.
Multifamily Developments
No matter what the state of the economy, people need places to live. This is why multifamily investment opportunities are more protected from any negative impact of economic volatility. However, in times of growth and new job opportunities in a community, multifamily properties are the perfect investment to consider, especially for new development and construction.
Knoxville is also poised to see a rise in local jobs—from Amazon finally using the warehouse spaces they’ve built in the area to the opening of the new Covenant Health Park baseball stadium downtown in 2025. More jobs bring more people who need more places to live. Multifamily properties are more sustainable long-term for growing populations like we’re seeing in East Tennessee.
“This population growth has attracted investors from across the country to start investing in our city. Knoxville’s growth is just beginning!” – Cohl Morgan, Senior Partner, Multifamily Advisory Partners at SVN | Wood Properties
Retail Evolution: Shop Local
Even though e-commerce continues to rise, so does foot traffic in brick-and-mortar retail spaces. Retail foot traffic is anticipated to surpass pre-pandemic levels by 2025. In communities like Knoxville, this is especially true for local retail shops and businesses. Community events not only draw visitors downtown, but they also cause those same visitors to explore our local shops and spaces, especially if they create a unique experience.
Walkability from space to space contributes to this overall experience. A great example of this is how downtown Knoxville’s retail sector has expanded. The Old City used to be known for its bars and restaurants, but now you can find just as many local shops and gift stores to support.
Opportunities for Commercial Real Estate Investments
The ups and downs of the commercial real estate market aren’t easy to navigate on your own. As our region continues to see economic and demographic growth, it does lead to significant opportunities for commercial real estate investments. However, you always want to make sure you’re making the right investment for your portfolio at the right time.
Our team of trusted commercial real estate advisors approaches every opportunity with the community and your success in mind. With a deep understanding of the East Tennessee market, we know where and when the right opportunities for you will show up, no matter what property type you’re interested in, or whether you’re looking to buy or sell. With a proven track record of brokering winning deals, providing expert consultation, and managing properties with ease, SVN | Wood Properties is your trusted partner for unlocking the full potential of your commercial real estate.
SVN | Wood Properties is your premier choice for comprehensive commercial real estate solutions in East Tennessee. We are part of the SVN International, a network of more than 2,000 advisors and staff in 200+ offices worldwide. We leverage the power of a global real estate network and local market expertise for every client we help.
Whether you’re a large corporation, a middle-market business, or an individual investor, our team–from seasoned senior advisors to energetic new-to-business agents–is committed to meeting your unique needs and goals. We ensure you’re informed every step of the way while we take the burden of worrying about the details off of your shoulders.