PROPERTY MARKET STUDIES
The Executive Summaries from the most recent MPC Market Analyses of industrial, office and shopping center space are available below. To purchase the complete reports,
contact Bryan Berry at (865) 215-2500 or email@example.com
2014 Office Market Analysis
Knoxville’s office market continued to improve in 2014. The areawide vacancy rate shed 50 basis points, from 16.0 percent in 2013 to 15.5 percent this year. Downtown vacancies dropped from 14.0 percent in 2013 to 12.9 percent, while the suburban market improved 20 basis points to 16.7 percent vacant this year.
Occupancy increased in four of the seven Knoxville sub-markets, as areawide absorption grew to 247,953 square feet since last year. Suburban markets absorbed the bulk, 169,700 square feet, while the remaining 54,000 square feet was downtown.
One new and five existing office properties were added to this year’s inventory comprising 95,438 square feet.
Among Knoxville’s three main categories of rentable office inventory, general use accounted for a 69 percent share, with a vacancy rate of 17.1 percent (Table 2). Medical followed with 17 percent of the area’s rentable inventory and 21.8 percent availability, while government use comprised the remainder, with the lowest vacancy rate, 3.6 percent.
2012 Shopping Center Market Analysis
In the past year or so, the national economy has shown glimmers of improvement. Unemployment was 8.1 percent in April of this year, down from the 10 percent peak of October 2009, while per capita retail sales were up 5.0 percent in 2010. Although employment and consumer confidence have improved, total retail sales are still below performance figures registered in 2007.
According to analysts, national retail vacancies remained flat, hovering around 11 percent over the last three quarters of 2011. Despite stagnant availability, the prospects of economic improvement stirred developers to revive retail projects shelved when the economy contracted in early 2008. This was evidenced by new retail supply increasing from 23 million square feet in 2010, to almost 50 million square feet delivered in 2011. Most analysts, however, do not expect the pace of new retail development to accelerate further until 2014.
Since last reported by MPC in 2008, the Knox County shopping center market offered mixed signals about its overall health. The inventory of gross leasable retail space increased 7.9 percent for a total of 17.7 million square feet countywide, and, while new supply was added, vacancies climbed from 9.2 percent in 2008 to 12.9 percent availability in 2012 (Table 1). Among local sub-markets, results were also mixed. Broadway/North, Chapman/Alcoa, and Farragut/Pellissippi each reported inventory gains over 300,000 square feet, but they also recorded some of the county’s highest vacancies.
2009 Hotel Market Analysis
The nationís lodging industry declined during the past two years as indicated by several market measures. Average occupancy rates fell from 63.2 percent in 2007 to 55.1 percent in 2009, while average guestroom rates dropped 5.9 percent since 2007 to $97.51 this year. Across the country the annual revenue per available room (RevPAR) was $53.72 in 2009, down 18 percent in the last two years.
Knox Countyís hotel market experienced a tumultuous two years as well, with occupancy rates falling from 60.4 percent in 2007 to 50.1 percent this year across the areaís 8,737 guestrooms in 95 properties. Despite increased availability, the average guestroom rate only fell two percent since 2007 to $70.11 in 2009. The RevPAR this year was $35.13, a decline of 18.5 percent since 2007ís level of $43.12.
Not all news was bad though as construction added five new properties to the local market, accounting for 424 new guestrooms. Forty-two percent of areawide guestrooms could be found for under $80 per night, while 18 percent collected over $120 per night.
2014 Industrial Space Inventory
In 2009, the last time that MPC’s Industrial Space Inventory was conducted, the U.S. labor market was stymied by the Great Recession. Nationally, overall unemployment hovered around 10 percent, while manufacturing segment jobless rates peaked at 13.0 percent. In the five years since, the U.S. economy improved, with total unemployment dropping to 6.2 percent and manufacturing jobless rates strong at 5.2 percent in July of 2014. Growth in the national economy was felt in part by expansion of the industrial sector, with renewed production demands leading to needs for more space; as a result, vacancy rates declined from 13.4 percent in the first quarter of 2010 to 11.1 percent in the first quarter this year.
Knoxville’s industrial economy also made gains. The local labor market saw unemployment drop from around 8.0 percent in early 2010 to 6.3 percent in July of 2014. Despite those gains, though, little change was seen in the area’s industrial property inventory. Total supply was 32.9 million square feet this year, a negligible increase from 32.8 million square feet registered five years ago. Areawide, the market added 16 industrial properties (six new and 10 existing), while 13 buildings were removed from the inventory. Vacancies also grew, reaching 14.9 percent in first quarter 2014, up from 14.1 percent in 2009.
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Page Last Updated:
May 15, 2015