As we navigate through 2025, the commercial property landscape in Chattanooga continues to evolve in response to changing tenant expectations and market conditions.
The Multifamily Market: Adjusting to New Realities
With 2,200 units delivered over the past four quarters, vacancy climbed to 11.5% overall, though the stabilized rate sits at a healthier 6.9%. Rents decreased by 1.7% in 2024. Only 829 units are currently under construction, which should allow the market to absorb vacant units and return to normal rent growth.
Office Space: Stability Despite National Trends
Chattanooga's office vacancy rate in Q1 2025 is just 4.7%, close to the five- and ten-year averages. Tenants increasingly want flexible terms, modernized spaces with strong tech infrastructure, wellness amenities, and walkable locations. Market rents average $23 per square foot across roughly 1.2 million square feet of available space.
Industrial Market: Tight Conditions Continue
Vacancy has stayed below 4% since mid-2021. Tenants want higher clear heights, enhanced power capacity, strategic multimodal locations, and sustainability features. Minimal new supply (17,700 sf delivered in 12 months) should keep vacancy near 4% with continued rent growth.
Retail Market: Evolving with Consumer Behavior
Vacancy rose modestly by 0.2%, with 200,000 sf delivered and 130,000 sf absorbed. Tenants want experiential spaces, right-sized footprints, and strong co-tenancy. Average rents are $17.20/sf with 3.4% year-over-year growth, well above the 1.8% national average.
Sustainable Features and Adaptive Reuse
Across all property types, tenants increasingly value energy-efficient systems and water conservation, along with repurposed historic buildings that combine modern amenities with authentic character.
Team transaction volume was up 77% in 2024, positioning SVN | Second Story to help tenants navigate office, industrial, retail, and multifamily opportunities across the Chattanooga market.