Tennessee Retail Market Report
Nashville
By the Numbers
- SF Delivered: 138,054 ↓ from Q3 2024
- SF Absorbed: 95,279 ↓ from Q3 2024
- Sales Volume: $268M ↑ from Q3 2024
Nashville Demographics
- Unemployment Rate: 2.8%
- Current Population: 2,134,770
- Households: 861,603
- Median Household Income: $84,891
Nashville Retail Market Performance
Demand for retail space in Nashville has continuously increased throughout 2024; however, available space is low. There was 1.3 million square feet delivered throughout the past year, but demand quickly took up all of the space that was completed. However, about 760,000 square feet is underway. This metric is still below the metro’s 10-year average construction level.
Areas like Brentwood, Cool Springs, and Vanderbilt-West End note the highest rent. Residents in these submarkets record high median incomes, and anchors like Vanderbilt bolster the area’s success. Due to the metro’s strong population, retail vacancy is expected to remain below 3.5% through the next five years, which is below the national level.
The majority of ongoing construction is targeting build-to-suit facilities and quick service restaurants. For example, Marketplace at Savannah Ridge is set to deliver in November 2025 and will total 79,200 square feet. There are already two tenants in place, with 6.6% of the property leased.
Sales Velocity
Increased demand activity has led to $912 million in sales, which is an increase of 13% from 2023. Most sales have been in the $1 to $3 million range, with pricing around $150 to $300 per square foot. Private investors and users have been the most active as they hold over 50% and 25% of Nashville’s properties, respectively.
Knoxville
By the Numbers
- SF Delivered: 54,450 ↑ from Q3 2024
- SF Absorbed: 110,410 ↑ from Q3 2024
- Sales Volume: $45.4M ↓ from Q3 2024
Knoxville Demographics
- Unemployment Rate: 3.1%
- Current Population: 946,393
- Households: 377,557
- Median Household Income: $70,823
Knoxville Retail Market Performance
Knoxville’s vacancy rate of 2.5% is significantly lower than the 10-year average of 3.4%. General retail vacancy is the lowest, standing at 1.0%. Leasing activity has been strongest in the North/Broadway submarket, with consistent leasing activity occurring here throughout 2024.
Together with the low vacancy rate, construction has also begun to slow in Knoxville. Around 130,000 square feet is underway as of Q4 2024. The largest property on the way is a neighborhood center that will deliver 54,817 square feet to the Oak Ridge submarket upon completion in January 2025.
Sales Velocity
There have been 204 sales in Knoxville’s retail segment throughout the past year, which led to a total of $257 million in transactions. A portfolio sale at the Pavilion of Turkey Creek power center made up the largest transaction with four different properties trading. All together, the four-property deal totaled $56.3 million.
Chattanooga
By the Numbers
- SF Delivered: 16,566 ↓ from Q3 2024
- SF Absorbed: 47,141 ↓ from Q3 2024
- Sales Volume: $41.7M ↓ from Q3 2024
Chattanooga Demographics
- Unemployment Rate: 3.2%
- Current Population: 583,136
- Households: 235,910
- Median Household Income: $74,293
Chattanooga Retail Market Performance
Deliveries have not been able to keep pace with absorption as 230,000 square feet of space was delivered over the past year, followed by 200,000 square feet of absorption. Due to this activity, rents have grown by 3.3% in the metro. The average market rent per square foot reached $17.11, with rents in neighborhood centers increasing the most by 3.8%.
New retail additions will rise in Chattanooga as 98,000 square feet makes up the delivery pipeline. The new construction is made up of general retail space, and the majority will be added in the East submarket. About 44,655 square feet of space will be delivered here, with 75.2% of the additions already pre-leased.
Sales Velocity
During 2024, there were 157 transactions, which totaled $239 million in deals. This total is close to the average five-year sales volume of $240 million. Retail properties are also affordable here at $155 per square foot per sale, while the national sale price is $249 per square foot.
