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When people speak about real estate, many automatically think of homes, but the commercial sector is just as crucial to our local and national economy. So, where does the Greater Chattanooga area stand in the national commercial market?
First, let’s look across the nation to get the big picture. The first quarter of the year was anything but boring for commercial real estate. The recent developments in the banking sector added concerns about lending activity in the market. While commercial real estate relies heavily on the banking industry for capital, there were rising concerns that recent bank failures would make it harder to get a commercial real estate loan. Nevertheless, according to the Federal Reserve, commercial real estate loans of small, domestically commercial banks remained unchanged during the first quarter of 2023 despite bank failures.
A helpful benchmark to compare commercial real estate to is 2020. So how has Chattanooga changed since 2020? The National Association of REALTORS® Commercial Real Estate Report from Q1 shows that our population has grown 0.7%. For comparison, the national average is a growth of 0.1%. Our economy has increased 10.1 percent with an unemployment percentage of 3.0, which is below the national average of 3.5 percent. In fact, Tennessee ranks ninth in the nation for job growth since March 2020.
A recent study from the U.S. Bureau of Economic Analysis summarizes our area in a helpful way. “The Chattanooga metro area has seen a strong surge in its economy, underpinned by significant growth in the technology, healthcare, and manufacturing sectors. The city boasts of a rising population, low unemployment rates, and a growing GDP.” This study states that such economic growth generally translates to a positive environment for commercial real estate.
Bloomberg Businessweek also recently pointed out that office spaces in Chattanooga are expected to experience a resurgence in demand. As more companies are favoring a hybrid work model, there is a growing requirement for smaller, flexible office spaces.
This is a lot of data to go through, but the bottom line is that commercial real estate is looking to make gains in 2023, which translates to more jobs and a more robust economy for our area. Whether you’re looking to purchase a property to call home, or somewhere to start a business, utilizing the expertise of a REALTOR® is the way to make sure that you’re getting the most out of your investment. REALTORS® work for their clients and communities every day. That’s Who We R®.