Knoxville: No Longer in Nashville’s Shadow?
Both investors and developers are actively seeking opportunities in the market, which is expected to add new units at a rate that has not been met since 2011.
By Alex Girda
Knoxville rent evolution, click to enlarge
Following the fourth consecutive month of rents growing faster than the national average rate, the city looks poised to take its development even further. A new cycle high for investment sales in 2016 and the expectation that the city will add new units at a rate that has not been met since 2011 are signs that both investors and developers are more actively looking at opportunities in the market.
While job growth tempered over the summer, a number of corporate investments in manufacturing should continue to bolster the economy, and the low unemployment rate indicates that the job market is stable. The announced renovation of the University of Tennessee’s 100,000-seat Neyland Stadium is a $108 million commitment to the improvement of the city’s main intellectual node and provider of skilled labor.
Despite limited deliveries during the year’s first half, roughly 1,200 units are expected to come online 2017, one of the most substantial completion rates of this cycle. Developers have 1,400 units underway, with another 1,900 in various stages. The relative affordability of housing in Knoxville is making it a cheap alternative to Nashville, with developers focusing on the I-40 corridor, which provides access to the state’s largest city. As Knoxville continues to expand, we expect rent growth to remain steady, reaching 4.4% for the year.
