Knoxville Multifamily Report – Summer 2019
The metro's economy is accelerating, strengthening market fundamentals and pushing year-over-year rent gains above the 3.4 percent national average as of July.
Knoxville rent evolution, click to enlarge
Knoxville’s economy is steadily accelerating, strengthening the metro’s multifamily fundamentals. The market’s healthy demand, coupled with tepid construction activity, pushed up rent growth to 3.6 percent year-over-year through July, 20 basis points above the U.S. rate. The average Knoxville rent surpassed the $1,000 mark for the first time, reaching $1,023 as of July.
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Employment growth saw a 1.9 percent uptick during the 12 months ending in June, outpacing the national rate for the first time since 2011. Trade, transportation and utilities led growth, following last year’s nearly 2.2 million passengers that traveled through McGhee Tyson Airport. Manufacturing rose a solid 4.6 percent and is poised for sustained growth. There are several developments underway set to boost the area’s economy, including the $6.5 billion Uranium Processing Facility at Y-12 National Security Complex in Oak Ridge, slated for completion in 2025. Meanwhile, three employment sectors contracted—including construction—losing a combined 800 jobs.
Knoxville sales volume and number of properties sold, click to enlarge
Transaction activity moderated considerably: Only three assets of 50 or more units traded in Knoxville this year through July. Deliveries also lagged, with just one property coming online during the first seven months. Mostly due to tepid supply, we expect the average Knoxville rent to continue rising, clocking in at 3.6 percent for the year.
