Chattanooga CRE Market Shows Strong Q3 Performance 📈
Key Takeaways
- •Downtown office vacancy rates improved to 8.5% in Q3 2023
- •Industrial rental rates increased to $6.75/SF annually in Airport submarket
- •$45 million Riverfront Mixed-Use Development breaking ground November 2023
Chattanooga Commercial Real Estate Market Gains Momentum in Q3 2023
The Chattanooga commercial real estate market is demonstrating strong fundamentals across multiple sectors, with recent data revealing encouraging trends for investors, tenants, and developers alike.
Office Market Shows Improvement
Downtown Chattanooga's office market posted encouraging results in Q3 2023, with vacancy rates declining to **8.5%**, down from 9.2% in the previous quarter. This improvement signals growing confidence in the urban core and suggests that businesses are increasingly viewing downtown as an attractive location for their operations.
The office sector saw significant activity with the $2.25 million sale of a 15,000-square-foot Class B office building at 123 Main Street. At $150 per square foot, this transaction reflects stable pricing in the downtown corridor and demonstrates continued investor interest in Chattanooga commercial properties.
Industrial Sector Maintains Strength
The industrial market continues to show robust demand, particularly in the Airport submarket where rental rates reached **$6.75 per square foot annually** in Q3 2023, up from $6.50 in the previous quarter. This growth trajectory keeps Chattanooga competitive with regional markets while maintaining a cost advantage over Nashville's $7.25 per square foot rates.
A notable 20,000-square-foot warehouse lease at 456 Industrial Boulevard exemplifies this demand, with Logistics Solutions LLC securing a five-year agreement at $10 per square foot. The Airport submarket's strategic location and transportation access continue to attract logistics and distribution companies.
Major Development Pipeline Adds Momentum
The announcement of the **$45 million Riverfront Mixed-Use Development** at 789 Riverfront Parkway represents a significant vote of confidence in Chattanooga's growth trajectory. The 120,000-square-foot project, featuring 80,000 square feet of retail and 40,000 square feet of office space, is scheduled to break ground November 15, 2023, with completion targeted for June 2025.
Business Relocations Signal Market Confidence
Tech Innovations Inc's decision to relocate its 75-employee headquarters from Knoxville to 200 Market Street in downtown Chattanooga further validates the market's appeal. The company's 10,000-square-foot downtown location, planned for Q1 2024, underscores Chattanooga's growing reputation as a technology hub with access to skilled talent.
Infrastructure Investment Supports Growth
The approved $120 million I-75 Corridor Expansion project near East Brainerd will enhance accessibility to commercial and industrial properties. Construction beginning in Q2 2024 and completing by Q4 2026 will improve traffic flow and increase the attractiveness of the East Brainerd submarket for businesses requiring highway access.
Market Outlook
With declining vacancy rates, steady rental growth, major development projects, and significant infrastructure investment, Chattanooga's commercial real estate market is positioned for continued growth. The combination of business relocations and new development activity suggests sustained demand across property types.
**Contact Liberty Commercial Real Estate for personalized market insights and to explore opportunities in Chattanooga's dynamic commercial real estate market.**