Optimism about the economy showed up in Knoxville’s office market at the end of 2014.
According to CoStar data, total office vacancy fell to 8.3 percent in the fourth quarter, down from 8.8 percent in the prior quarter.
Matt Fentress, of NAI Knoxville, said a change in consumer sentiment, driven in part by lower gas prices and other positive signs in the economy, has provided a boost to to the office sector.
“Approximately 70 percent of the businesses in Knoxville are 2,500 square feet and under,” Fentress said. “That’s where the real fear was in the small businesses. And so what we saw during the fourth quarter of 2014 and continue to see now is confidence about their business, confidence now to go ahead and make longer term decisions.”
Among the region’s biggest submarkets, the strongest rents are in the Bearden/Papermill corridor, with an average quoted rate of $16.90 a square foot.
Fentress attributed that submarket’s success in part to the impact of the Brookview Town Centre development.
“When Brookview Town Center got built, that was the new icon building in town,” he said. “And attorneys realized they didn’t have to be downtown, they could move 10 minutes from downtown and still be close enough.”