MARKETBEAT - Cushman & Wakefield | Cornerstone

MARKETBEAT
RETAIL SNAPSHOT
KNOXVILLE, TN
Q3 2014
A Cushman & Wakefield Research Publication
ECONOMIC OVERVIEW
According to the Bureau of Labor Statistics,
Knoxville boasted the second lowest
unemployment rate in the state at 6.7%, 40
basis points lower than the Tennessee average.
Knox County has experienced over a 20%
increase in total business establishments over the last five years.
Knoxville’s Innovation Valley continues to contribute to the region’s
economic health through business retention and corporate relocation
and expansion initiatives.
ECONOMIC INDICATORS
NATIONAL
2013
2014F
2015F
GDP Growth
2.2%
2.2%
3.5%
CPI Growth
1.5%
1.8%
2.1%
Consumer Spending
Growth
2.4%
2.4%
3.6%
Retail Sales Growth
4.2%
4.1%
6.1%
2013
2014F
2015F
KNOXVILLE RETAIL MARKET
REGIONAL
Market conditions in the Knoxville retail sector experienced little
change this quarter. There was a slight dip in the vacancy rate, ending
Q3 at 6.9%. Retail activity has gained momentum with a significant
number of tenants under 5,000 square feet (sf) looking for space.
Household Income
$45,487
$46,909
$48,721
Population Growth
0.8%
0.9%
0.9%
Unemployment
6.9%
5.1%
4.0%
The newly renovated Papermill Plaza is set to deliver by year-end
with REI opening their doors shortly after completion. Ulta, Jimmy
Johns, and Whole Foods are just a few of the new businesses that will
open operations in the highly awaited retail center over the next
several quarters. Located at the intersection of Kingston Pike and
Papermill Drive, Papermill Plaza is situated in a prime location in
West Knoxville.
Retail development has been picking up in the Knoxville market.
Projects that are currently under construction have also benefited
from current market conditions. Unanchored strip centers are
commencing construction at pre-leasing levels well below what
lenders have required in recent history. Allowing these projects to
get underway earlier will give the market the inventory boost it needs
to accommodate interested tenants.
Source: Moody’s Analytics
OVERALL RENTAL VS. VACANCY RATES
psf/yr
Significant retail development delivered this quarter with the
completion of University Commons, a 211,000-sf retail center
anchored by Walmart and Publix. Located in the downtown
submarket, at the intersection of Kingston Pike and Volunteer Blvd,
the center sits in the heart of Knoxville and the University of
Tennessee.
$13.00
9.0%
$12.50
7.5%
$12.00
6.0%
$11.50
4.5%
$11.00
3.0%
$10.50
1.5%
$10.00
0.0%
2010
2011
2012
OVERALL NET RENTAL RATE
2013
Q3 14
OVERALL VACANCY RATE
Source: CoStar
OUTLOOK
The Knoxville retail market continues to experience growth. As the
constricted market struggles to have the right space to offer tenants,
construction deliveries will be critical to the sustained success of the
market.
Cornerstone Commercial Real Estate Services
6005 Lonas Drive, Suite 220
Knoxville, TN 37909
www.cushmanwakefield.com/knowledge
For more information, contact:
Melissa R. Laneve, Director
+1 (615) 727 7418
mlaneve@cornerstonecres.com
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2014 Cushman & Wakefield, Inc. All rights reserved.
1
**KNOXVILLE SUBMARKET STATISTICS (TOP FIVE)
SUBMARKET
INVENTORY
QUARTERLY CHANGE
IN INVENTORY
VACANCY
RATE
DEMAND
(OCCUPIED SQUARE FEET)
ASKING RENT
RENT GROWTH
YTD ABSORPTION
North/Broadway
10,481,666
(1,396)
6.2%
9,827,087
$10.05
(0.6%)
32,485
Bearden/Papermill
6,923,333
157,318
3.4%
6,687,369
$15.04
(2.5%)
115,886
Blount County
6,388,520
(16,110)
4.0%
6,131,051
$11.35
2.4%
75,369
Anderson County
5,325,289
115,573
12.8%
4,642,424
$10.85
(1.6%)
30,769
Pellissippi/Lovell
4,043,002
(88,733)
5.4%
3,825,085
$12.52
4.6%
10,520
51,256,024
432,985
6.9%
47,715,628
$11.20
(1.1%)
491,305
TOTAL MARKET
* RENTAL RATES REFLECT ASKING $PSF/YEAR
**THIS TABLE INCLUDES KNOXVILLE’S TOP FIVE SUBMARKETS BY INVENTORY SIZE. THE TOTAL MARKET INCLUDES THE OVERALL KNOXVILLE MARKET.
KNOXVILLE MARKET BY TYPE
VACANCY
RENTAL RATES
MEDIAN SALES PRICE / SQUARE FEET
Q3 2013
Q3 2014
Q3 2013
Q3 2014
Q3 2013
Q3 2014
3.6%
3.3%
$13.86
$13.26
N/A
N/A
13.4%
13.4%
$12.66
$11.94
N/A
N/A
6.1%
4.4%
$8.40
$8.34
N/A
N/A
Shopping Center
11.8%
11.1%
$9.12
$10.57
N/A
N/A
Specialty Center
N/A
1.6%
N/A
$18.50
N/A
N/A
7.4%
6.9%
$10.26
$11.21
$125.66
$138.65
General Retail
Mall
Power Center
TOTAL MARKET
* RENTAL RATES REFLECT ASKING $PSF/YEAR
MARKET HIGHLIGHTS
SIGNIFICANT Q3 2014 LEASE TRANSACTIONS
SUBMARKET
TENANT
PROPERTY TYPE
Town & Country Commons
Cedar Bluff / Walker Spgs
Blaze Pizza
Power Center
3,130
145 W Anderson Ave
North / Broadway
Contractor
Freestanding Retail
2,600
SIGNIFICANT Q3 2014 SALE TRANSACTIONS
SUBMARKET
BUYER
PURCHASE PRICE / $PSF
3203 Alcoa Hwy
Blount County
3 Minute Magic of Alcoa, LLC
$1,7580,000 / $61.87
28,287
875 Highway 321 N
Loudon County
Robert Hansen
$2,856,000 / $154.63
18,470
SIGNIFICANT 2014 CONSTRUCTION
COMPLETIONS
University Commons
SUBMARKET
MAJOR TENANT
COMPLETION DATE
Downtown
Walmart/Publix
Q3 14
211,000 (81%)
Kroger Marketplace
Anderson County
Kroger
Q2 14
113,531 (100%)
SIGNIFICANT PROJECTS UNDER
CONSTRUCTION
Papermill Plaza
SUBMARKET
MAJOR TENANT
COMPLETION DATE
Bearden/Papermill
Whole Foods
Q4 14
74,606 (92%)
9147 Kingston Pike
Cedar Bluff / Walker Spgs
Hardees
Q4 14
6,860 (100%)
Cornerstone Commercial Real Estate Services
6005 Lonas Drive, Suite 220
Knoxville, TN 37909
www.cushmanwakefield.com/knowledge
For more information, contact:
Melissa R. Laneve, Director
+1 (615) 727 7418
mlaneve@cornerstonecres.com
SQUARE FEET
SQUARE FEET
BUILDING SQUARE FEET
(% LEASED)
BUILDING SQUARE FEET
(% LEASED)
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2014 Cushman & Wakefield, Inc. All rights reserved.
2