Knoxville’s industrial market remains one of the tightest in the nation. At 1.4%, the metro’s vacancy rate remains well below the national average as steady demand, coupled with a lack of large-scale speculative supply, has kept industrial vacancies limited. Despite the tight vacancy rate, leasing activity has held steady. More than 2.4 million SF of industrial space was leased in 2023, and while that represented a decline compared to the more than 3.5 million SF of space leased in 2022, that was an all-time high mark for the metro. With such limited industrial availability in Knoxville, pricing power has held steady from a landlord’s perspective. Asking rents grew by 5.7%, the third year in a row in above 6%, with this trend likely to continue.

Activity within the capital markets space has not slowed as much here as in other parts of the country. A reported 103 deals took place in the past year. Although that total came in below the more than 115 deals that closed in each of the two prior years, it was still an output that exceeded the metro’s long-term annual average by about 15%. The Average Price per Sq Ft came in at $74 with Market Caps trending slightly upwards to 8.2%. This number is well below the national average. Listings remain scarce and continue to see immediate activity both from local and national investors.

Notable Baker Realty Company Transactions in Q4
– Leased 47,000 SF in Centre Stage Business Park – Clinton
– Leased 54,00 SF Build to Suit in Forks of the River Industrial Park
– Leased 25,000 SF in Northpark Industrial Complex – Alcoa
– Leased 7,280 SF in Middlebrook Industrial Park