T
he commercial real estate landscape in East Tennessee is navigating a complex environment, with rising interest rates and office vacancies dominating national headlines. However, according to Jim Staley CCIM of Wallace Commercial, the local market is faring better than expected. "Deals are still being done," he notes, despite the challenges posed by the Covid work-from-home phenomenon.

    Knoxville's office vacancy rate currently stands at 13%, with approximately 886,590 square feet available for lease. Staley predicts this number will rise to 15% by the end of 2025, but notes that this still outperforms the South Atlantic Region's projected 20.2% vacancy rate.

    The multifamily and industrial markets in Knoxville are also showing lower vacancy rates than regional averages. However, the retail sector is struggling, with a current vacancy rate of 20.4%. Staley emphasizes the importance of representation in commercial real estate, citing its complexity and potential for missteps.

    When advising buyers and tenants, Staley stresses two key considerations: having an exit strategy before purchasing and treating property as an investment rather than an emotional decision. For leasing, he advises understanding expenses passed through from the landlord and knowing who's responsible for maintenance and repairs.

    Wallace Commercial, a division of Wallace Real Estate, specializes in helping clients navigate these decisions across various market sectors. Staley attributes their advisors' success to three key factors: extensive knowledge of the local market, relationships with key players, and problem-solving skills.

    Looking ahead, Staley is optimistic about East Tennessee's commercial market, citing thriving local businesses and out-of-state interest in relocating to the area. With 16 full-time advisors and $65 million in annual sales and leases, Wallace Commercial is well-positioned to support clients navigating the complex world of commercial real estate.