Knoxville Retail Leasing Update
By Justin Sterling, Senior Advisor, NAI Koella | RM Moore
Knoxville's retail market remains one of the tightest in the country for tenants looking for space. Here is what the Q3 2026 data shows, and what it means for retailers, restaurant operators and shopping center owners in East Tennessee.
The numbers at a glance
Metric | Q3 2026 | Source |
Retail vacancy rate | 2.4% | NAI Koella | RM Moore Retail Market Report |
5-year / 10-year average vacancy | 2.5% / 2.9% | NAI Koella | RM Moore Retail Market Report |
Availability rate | 2.7% (about 1.7 million SF available) | NAI Koella | RM Moore Retail Market Report |
Market rent | $19.80/SF | NAI Koella | RM Moore Retail Market Report |
Rent growth, year over year | 1.3% (vs. 1.7% nationally) | NAI Koella | RM Moore Retail Market Report |
12-month net absorption | about 330,000 SF | NAI Koella | RM Moore Retail Market Report |
Under construction | about 320,000 SF (10-year average: 260,000 SF) | NAI Koella | RM Moore Retail Market Report |
Total inventory | about 61.4 million SF | NAI Koella | RM Moore Retail Market Report |
Vacancy is still near historic lows
According to the NAI Koella | RM Moore retail market report, Knoxville retail vacancy stands at 2.4%, below the market's five-year average of 2.5% and its 10-year average of 2.9%. The report notes that about 330,000 SF of net absorption outpaced about 210,000 SF of net deliveries over the past year, and forecasts overall vacancy to end 2026 at 2.5%.
Vacancy differs by property type. The same report lists neighborhood center vacancy at 5.2%, power centers at 0.5%, strip centers at 2.3%, malls at 3.0% and general retail at 1.2%.
What it means: For tenants, quality space, especially in power centers and freestanding buildings, is scarce. Starting a site search early and being ready to act on a lease matters. For landlords, neighborhood centers have the most room to lease up.
Rents are rising, but more slowly
The report puts Knoxville market rent at $19.80/SF, up 1.3% year over year compared with 1.7% nationally. Over the longer term, Knoxville's five-year average annual rent growth is 4.1% and its 10-year average is 3.4%, so recent growth is slower than the market's recent history. By property type, the report shows year-over-year rent changes of 2.0% for neighborhood centers, 2.0% for power centers, 1.4% for strip centers, 1.1% for malls and 1.0% for general retail.
What it means: Landlords still hold pricing power in a low-vacancy market, but the slower pace of rent growth may give well-qualified tenants more room to negotiate on concessions and terms.
New construction is picking up
The report shows about 320,000 SF of retail under construction in Knoxville, above the 10-year average of about 260,000 SF. New space can give expanding brands options, though much new retail is pre-leased or built to suit.
Where tenants are looking
The market report doesn't break out leasing by submarket, so this section is based on Justin's own conversations with tenants and landlords, not report data.
Hot submarkets: Cumberland Avenue near the University of Tennessee, Bearden and Farragut continue to draw the most tenant interest.
Emerging submarkets: Hardin Valley, Oak Ridge, Maryville and Lenoir City are increasingly on tenants' lists as they look beyond the core areas.
Broader economic backdrop
GSMCRE's Knoxville market summary also reports CoStar figures showing Knoxville industrial vacancy at 2.2% and office vacancy at 3.2%, and notes announced employment projects including TRISO-X's 1,140 jobs in Oak Ridge and Greenheck's $300 million Midway campus building toward 440 jobs. Population and job growth support continued retail demand.
Outlook
The report forecasts Knoxville retail vacancy to end 2026 at 2.5% and annual rent growth at 1.3%. In short, expect a tight market with steady, modest rent growth.
Frequently asked questions
What is the retail vacancy rate in Knoxville?
About 2.4%, according to the Q3 2026 NAI Koella | RM Moore retail market report.
What does retail space rent for in Knoxville?
The report puts average market rent at $19.80 per square foot. Retail asking rents are typically quoted on a triple net basis, per the report's definitions.
Is it a good time to lease retail space in Knoxville?
Space is limited, so tenants who plan early and act quickly have the best options. Slower rent growth may give strong tenants room to negotiate.
Where are retail tenants looking in Knoxville?
In Justin Sterling's experience working with tenants, Cumberland Avenue near the University of Tennessee, Bearden and Farragut remain the most sought-after areas, while Hardin Valley, Oak Ridge, Maryville and Lenoir City are emerging options.
Looking for retail space or tenants in East Tennessee?
Justin Sterling is a Senior Advisor at NAI Koella | RM Moore. In 20 years, Justin has closed more than 850 transactions and negotiated thousands of deals. Call (865) 236-1610 or email jsterling@koellamoore.com.
Sources
NAI Koella | RM Moore, Retail Market Report (Q3 2026 data): https://koellamoore.com/wp-content/uploads/2026/07/2026_Q2MarketReport.pdf
GSMCRE, "Knoxville Commercial Real Estate" market fundamentals (citing CoStar): https://gsmcre.com/knoxville-commercial-real-estate
Comments