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Knoxville’s industrial market has performed well in recent years, though activity has begun to slow down. At 1.4%, the metro’s vacancy rate remains near all-time lows as steady demand, coupled with a lack of large-scale speculative supply, has kept industrial vacancies limited. Owners are capitalizing on the tight market and are raising rents at a brisk pace. Year-over-year rent growth of 10.2% is near all-time highs, and while there is a likelihood that growth begins to slow from its outsized pacing, it will likely be gradual in nature, keeping pricing power in the hands of landlords in the near term. Asking rents are now more than 40% above rates from 2017 and newly developed space comes at a premium in the current conditions. Given that availabilities remain exceedingly scarce in the Knoxville metro, property owners may be able to continue raising rents at an above- average pace over the next several quarters.


Investment activity hasn’t dropped off by much in Knoxville recently, even given the rise of interest rates over the past four quarters. For example, from 2015 through 2019, the metro’s four-quarter trailing investment total averaged about 100 deals. While that four-quarter trailing total rose to as high as 135 deals by early 2022, the third quarter of 2023’s four-quarter trailing output stood at about it has slimmed from the all-time high levels of activity from just six quarters ago. Capitalization Rates remain at 7.5% but forecasts project an uptick to pre-covid levels going into 2024. 110 deals. Thus, activity is still about 10%
above pre-pandemic norms, although

Notable Baker Realty Company Transactions in Q4

– Leased – 60,000 SF Expansion at Eastbridge Industrial Park
– Renewed Lease – 15,000 SF Warehouse near Lovell Road