SOUTHEAST SNAPSHOT, OCTOBER 2006

Knoxville, Tennessee Multifamily Market

Knoxville has a steady economy. Its economy does not experience the peaks and valleys of other areas because of the types of employers the city has such as the University of Tennessee, the Tennessee Valley Authority and the Oak Ridge National Laboratory. Even with Knoxville’s steady economy, though, there has not been much multifamily development recently. Land availability is an issue as land prices rise rapidly due to a limited supply.

One of the most recent multifamily developments is Walden Legacy, a 236-unit development in west Knoxville that was developed by United Residential Properties. It is an upscale, gated community with high-end amenities. Rental rates range from $695 for a one-bedroom, one-bathroom unit to $1,125 for a three-bedroom, two-bathroom unit.

A new development planned for west Knoxville is Lovell Crossing, located close to Centerpoint Business Park. Lovell Crossing Apartments LP, a joint venture between Ron Watkins of Partners and Associates and Robert Mohney of Saddlebrook, is developing the project. This upscale community will include 216 units complete with Whirpool washer and dryer units and other standard appliances. Amenities will include garage space, a pool and spa with a fireplace and a large clubhouse. Rental rates will range from $740 for a one-bedroom, one-bathroom unit to $1,050 for a three-bedroom, two-bathroom unit. Lovell Crossing will be managed by Deborah Petrolina of I.M.S. Management. Occupancy is expected in summer 2007.

London Towne Apartments, also located in west Knoxville, is expanding as 81 units are being added to the complex, bringing it to 289 units total. Donna Heaton, property manager for Baco Realty, is managing the property. Rental rates for the multifamily property have increased by 4 percent this year.

The majority of the development taking place is in west Knoxville. However, the number of units around the University of Tennessee has grown rapidly with three new communities being built within the past 5 years. The campus has a student population of more than 26,000, making it a natural market for developers focused on student housing.

Meanwhile, condominium developments are a hot commodity in the downtown area. Older buildings are being renovated into loft style apartments and are selling very quickly. The south Knoxville waterfront is slated to be redeveloped in the near future into condominiums, parks and retail space. Knoxville-based University Real Estate has already built a five-story, 50-unit condominium community in the area and only six units remain unsold. It features a parking garage and a marina with 20 boat slips. Atlanta-based developers Camden Management Partners and Focus Development are developing City View at Riverwalk on the waterfront. Construction has barely begun on this project and sales are very brisk.

The vacancy rate in Knoxville is estimated around 5 percent. This low rate coupled with the rising rental rates have spurred what multifamily development there is in Knoxville.

— Jim Simpson is a managing broker for Coldwell Banker Commercial Wallace and Wallace in Knoxville, Tennessee.  

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