Office, retail and industrial spaces in Knoxville and East Tennessee are filling up. The numbers show a significant improvement over business activity during the great recession.
Business and commercial real estate continued growth in a five-county area that includes Knox, Anderson, Blount, Loudon and Union counties, according to first-quarter figures tallied by NAI Knoxville. Retail and industrial spaces saw either steady occupation rates or growth in the first three months of 2014. Industrial markets reported less than nine percent vacancy, and retail spaces were down to about seven percent vacancy.
"The office market is recovering the slowest," NAI Knoxville broker Maribel Koella said. "Some of that is due to a reconfiguring of office space after the recession - for instance, more people working from home."
Even so, Koella said, there's optimism about the office space market, as small businesses gain more confidence about hiring and expansion. Koella said NAI Knoxville expects that sector to gain momentum as the year unfolds.
The growth in businesses interested in renting or buying new spaces is a good sign for regional economic health, but it presents its own downside. Projects to build new industrial and commercial spaces stalled during the recession. So the spaces available today are running out.
“If we continue to fill up industrial space at the rate we’re filling it up right now, we’re projecting that in a year, we’ll have a serious shortage of industrial space,” Koella said.
Koella said it takes about a year for a commercial space to evolve from groundbreaking to ribbon-cutting, meaning a potential shortage of real estate could linger until construction catches up with business growth.