Leasing
Knoxville’s industrial market remains one of the tightest in the nation. At 1.6%, the metro’s vacancy rate sits well below the national average as steady demand, coupled with a lack of large-scale speculative supply, has kept industrial vacancies limited. Given the tight vacancy rate, leasing activity has slowed. More than 1.9 million SF of industrial space was leased in 2024, down 20% from 2023. With such limited industrial availability in Knoxville, pricing power has held steady from a landlord’s perspective. Asking rents grew by another 3.3%, close to the pre-2020 annual growth rate of 5%, but down from the 11% increase of recent years.
Sales
Activity within the capital markets space has slowed over the past year. A reported 85 deals took place in the previous four quarters, compared to an average of 110 deals the past 5 years. The average sales price in Knoxville registered at $82 per square foot, significantly below the national benchmark of $157/SF. Capitalization rates have held steady at 8.1%, remaining above the national average of 7.3%. Good listings remain scarce and continue to see immediate activity both from local and national investors.
Notable Baker Realty Company Transactions in Q3
– Sold 44,500 SF Warehouse at Eastbridge Industrial Park
– Leased 19,000 SF Warehouse on Central Street
