Annual Analysis Finds High Suburban Vacancy Rate a Major Contributor to Lukewarm Office Market Showing in 2012

MPC Research Associate Bryan Berry has been analyzing the local and national office property markets for more than eight years and has just completed work on MPC's latest publication, Office Market Analysis for Knoxville and Knox County, 2012. Along with areawide market data, the report offers insights into seven sub-markets and gives detailed listings of more than 600 office properties, reporting on rentable space, vacancy rates, rent ranges, contact information, and more.

Knoxville's office property market made a lukewarm showing in 2012, with the areawide vacancy rate climbing two percentage points over last year. While the downtown market reported only slightly higher vacancy?up less than one percent?this year's big story is the large jump in suburban market vacancies: 2.7 percent in one year.

"Historically, the Knoxville market has by and large outperformed the U.S.," said Berry. "But with increased vacancies over the last two-to-three years, the local market is now on par with the nation."

In addition to analyzing vacancy and absorption rates over the last decade, the Office Market Analysis provides insight into the types of office space that are available. Rentable inventory is divided into three categories: general, medical, and government. Of the total available space, 68 percent falls into the general category, followed by 25 percent in medical and seven percent in government.

While only two new properties were added to the local inventory in 2012?Southeast Eye Center on Conner Road in the North sub-market and a building at 306 Prosperity Drive in the Cedar Bluff sub-market?there are a number of potential projects on the drawing board.

As the national and local economies continue to inch forward along a path of recovery, Berry said, "Hopefully improvements in employment will translate into increases in demand for office space."

Digital or paper copies of the 2012 Office Market Analysis can be purchased by contacting Bryan Berry at 865-215-2500 or bryan.berry@knoxmpc.org.

Posted 03-06-2013, written by Sarah Powell