Although vacancy rates have improved over the previous quarter (from 8.4% to 7.9%), this large drop may not represent a long term trend as sharp as the quarterly results might indicate. Overall, we anticipate the continuation of a long, slow recovery. It should be noted that net absorption for the fourth quarter was positive (366,855 SF) compared with negative absorption in the second and third quarters of 2013. Rental rates remained flat at $3.65 PSF. As usual, flex buildings had significantly lower vacancy rates than warehouses (4.8% vs. 8.5%), and buildings in the 20,000 SF – 60,000 SF range were seeing the most interest.
Vacancy rates increased significantly in the fourth quarter from 8.1% to 8.7%. Net absorption was also negative for the quarter, at 199,021 SF, but vacancies should remain fairly flat in 2014. Uncertainty is still keeping small businesses from making decisions to expand. Rental rates were at $14.27 PSF for all classes this quarter, and they should also remain relatively flat at pre-recession levels.
The Knoxville retail market was relatively flat in the fourth quarter of 2013. The vacancy rate was unchanged at 7.4%, net absorption was slightly negative (21,119 SF) and vacancies in sublease space grew slightly (3,150 SF). There was, however, a rise in rental rates to $10.64 PSF from $10.27 PSF in the third quarter.