Commercial Leasing Trends in Chattanooga: What Tenants Want in 2025
By Kelly Fitzgerald, Senior Vice President of Brokerage – Chattanooga, TN
As we navigate through 2025, the commercial property landscape in Chattanooga continues to evolve in response to changing tenant expectations and market conditions. With over $150 million in transactions under my belt since 2016, I’ve witnessed firsthand how our local commercial real estate market adapts to shifting demands.
Today, I’m sharing what we’re seeing across key sectors and what tenants are actually looking for when leasing commercial space in Chattanooga.
The Multifamily Market: Adjusting to New Realities
The multifamily sector tells an interesting story this year. With 2,200 units delivered to the market over the past four quarters, we’ve seen vacancy rates climb to 11.5% overall. Don’t let that number alarm you- the stabilized vacancy rate (only including complexes that are 18 months old or have reached 90% occupancy) sits at a much healthier 6.9%.
What does this mean for tenants? First, they have more options and a little more negotiating power than in recent years. Rents decreased by 1.7% in 2024, a welcome relief after the 10% annual growth we saw during the immediate post-pandemic period.
Chattanooga continues to grow. For example, on March 12, 2025, the Hamilton County Commission voted unanimously to approve a deal allowing Novonix to purchase more than 182 acres of land at Enterprise South Industrial Park. Once complete, the project is expected to create approximately 500 jobs in the area. Additionally, the expected growth in the downtown area, which includes the new Lookouts stadium, the development of Hawks Hill, and projects such as The Bend, will continue to attract new residents.
Looking ahead, only 829 units are currently under construction. This slowing pace should allow the market to absorb some of the vacant units and eventually return to normal rent growth. Tenants who act now may find themselves in an advantageous position to secure favorable lease terms before the market tightens again.
Office Space: Stability Despite National Trends
While many markets across the country are wrestling with high office vacancy rates, Chattanooga has maintained stability. Our office market vacancy rate in Q1 2025 is just 4.7%, which is comparable to our five-year average of 4.4% and ten-year average of 4.8%.
What tenants want in office space has fundamentally changed, though. The pandemic permanently altered how businesses think about their workspace needs. Today’s office tenants are looking for:
- Flexible terms that allow for growth or contraction
- Modernized spaces with strong technology infrastructure
- Wellness features and amenities that help attract and retain talent
- Locations that offer walkability to restaurants and services
With approximately 1.2 million square feet of available office space and market rents averaging $23 per square foot, Chattanooga offers real value compared to larger markets. The lack of new construction suggests that quality office space will remain in high demand.
Industrial Market: Tight Conditions Continue
Chattanooga’s industrial market has been a consistent performer, maintaining vacancy rates below 4% since mid-2021. Even with a slight uptick over the past year, these are historically low numbers that reflect the strength of our logistics and manufacturing sectors.
What industrial tenants want has also evolved significantly:
- Higher clear heights and more sophisticated building systems
- Enhanced power capacity for automation and technology
- Strategic locations with multimodal transportation access
- Sustainability features that reduce operating costs
With minimal new supply coming to market across the region (only 17,700 square feet delivered in the past 12 months), we expect vacancy rates to level around 4%, and rent growth should continue through most of 2025.
Check out our recent success story, Advisors Quadruple Building Value for Seller With Long-term Lease.
For businesses looking to expand or relocate their industrial operations, my advice is simple: start your search early and be prepared to move quickly when the right opportunity arises.
Retail Market: Evolving with Consumer Behavior
Our retail market continues to respond to changing consumer habits. Chattanooga’s retail vacancy rate has seen a modest increase of 0.2%, with 200,000 square feet of new space delivered and 130,000 square feet absorbed over the past year.
What retail tenants want today reflects broader shifts in shopping patterns:
- Experiential spaces that can’t be replicated online
- Right-sized footprints that maximize sales per square foot
- Strong co-tenancy to drive foot traffic
With average market rents at $17.20 per square foot and a healthy 3.4% year-over-year growth (compared to 1.8% nationally), Chattanooga’s retail market demonstrates continued strength. The 97,000 square feet currently under construction suggests ongoing confidence in the sector.
Sustainable Features and Adaptive Reuse
Across all property types, two trends are increasingly important to Chattanooga tenants:
Sustainability Initiatives: Tenants are increasingly looking for buildings with energy-efficient systems, water conservation features, and other environmentally friendly attributes. This isn’t just about corporate responsibility, it’s about lowering costs to combat rising utility expenses.
Adaptive Reuse: Chattanooga’s rich architectural heritage provides multiple opportunities for adaptive reuse. We’re seeing continued interest in repurposed historic buildings that combine modern amenities with authentic character. These projects command premium rents while preserving our city’s unique identity.
Having started my career as an architect before transitioning to commercial real estate, I have a special appreciation for thoughtful building design and renovation. It’s been a privilege to be a part of so many of these historic properties coming back to life.
Looking Ahead: Commercial Opportunities in the Chattanooga Market
For tenants seeking commercial space in Chattanooga, 2025 presents opportunities across multiple sectors. The slight cooling in multifamily, combined with stable office conditions and tight industrial and retail markets, creates a balanced environment for strategic decision-making.
As your commercial leasing broker in Chattanooga, my team and I at SVN | Second Story is uniquely positioned to help you navigate these market conditions. With our team transaction volume up 77% in 2024, we continue to demonstrate our ability to deliver results in this market.
Whether you’re looking for office space leasing in Chattanooga, industrial property, retail locations, or multifamily investments, understanding market trends is the first step toward making informed decisions. The next step? Working with a CCIM candidate and experienced advisor who can help you translate these trends into practical strategies.
If you’re wondering how to lease a commercial property in Chattanooga or simply want to discuss your options in Hamilton County, give me a call! The right space is out there, and we can find it together.
By Kelly Fitzgerald, Senior Vice President of Brokerage – Chattanooga, TN
As we navigate through 2025, the commercial property landscape in Chattanooga continues to evolve in response to changing tenant expectations and market conditions. With over $150 million in transactions under my belt since 2016, I’ve witnessed firsthand how our local commercial real estate market adapts to shifting demands.
Today, I’m sharing what we’re seeing across key sectors and what tenants are actually looking for when leasing commercial space in Chattanooga.
The Multifamily Market: Adjusting to New Realities
The multifamily sector tells an interesting story this year. With 2,200 units delivered to the market over the past four quarters, we’ve seen vacancy rates climb to 11.5% overall. Don’t let that number alarm you- the stabilized vacancy rate (only including complexes that are 18 months old or have reached 90% occupancy) sits at a much healthier 6.9%.
What does this mean for tenants? First, they have more options and a little more negotiating power than in recent years. Rents decreased by 1.7% in 2024, a welcome relief after the 10% annual growth we saw during the immediate post-pandemic period.
Chattanooga continues to grow. For example, on March 12, 2025, the Hamilton County Commission voted unanimously to approve a deal allowing Novonix to purchase more than 182 acres of land at Enterprise South Industrial Park. Once complete, the project is expected to create approximately 500 jobs in the area. Additionally, the expected growth in the downtown area, which includes the new Lookouts stadium, the development of Hawks Hill, and projects such as The Bend, will continue to attract new residents.
Looking ahead, only 829 units are currently under construction. This slowing pace should allow the market to absorb some of the vacant units and eventually return to normal rent growth. Tenants who act now may find themselves in an advantageous position to secure favorable lease terms before the market tightens again.
Office Space: Stability Despite National Trends
While many markets across the country are wrestling with high office vacancy rates, Chattanooga has maintained stability. Our office market vacancy rate in Q1 2025 is just 4.7%, which is comparable to our five-year average of 4.4% and ten-year average of 4.8%.
What tenants want in office space has fundamentally changed, though. The pandemic permanently altered how businesses think about their workspace needs. Today’s office tenants are looking for:
- Flexible terms that allow for growth or contraction
- Modernized spaces with strong technology infrastructure
- Wellness features and amenities that help attract and retain talent
- Locations that offer walkability to restaurants and services
With approximately 1.2 million square feet of available office space and market rents averaging $23 per square foot, Chattanooga offers real value compared to larger markets. The lack of new construction suggests that quality office space will remain in high demand.
Industrial Market: Tight Conditions Continue
Chattanooga’s industrial market has been a consistent performer, maintaining vacancy rates below 4% since mid-2021. Even with a slight uptick over the past year, these are historically low numbers that reflect the strength of our logistics and manufacturing sectors.
What industrial tenants want has also evolved significantly:
- Higher clear heights and more sophisticated building systems
- Enhanced power capacity for automation and technology
- Strategic locations with multimodal transportation access
- Sustainability features that reduce operating costs
With minimal new supply coming to market across the region (only 17,700 square feet delivered in the past 12 months), we expect vacancy rates to level around 4%, and rent growth should continue through most of 2025.
Check out our recent success story, Advisors Quadruple Building Value for Seller With Long-term Lease.
For businesses looking to expand or relocate their industrial operations, my advice is simple: start your search early and be prepared to move quickly when the right opportunity arises.
Retail Market: Evolving with Consumer Behavior
Our retail market continues to respond to changing consumer habits. Chattanooga’s retail vacancy rate has seen a modest increase of 0.2%, with 200,000 square feet of new space delivered and 130,000 square feet absorbed over the past year.
What retail tenants want today reflects broader shifts in shopping patterns:
- Experiential spaces that can’t be replicated online
- Right-sized footprints that maximize sales per square foot
- Strong co-tenancy to drive foot traffic
With average market rents at $17.20 per square foot and a healthy 3.4% year-over-year growth (compared to 1.8% nationally), Chattanooga’s retail market demonstrates continued strength. The 97,000 square feet currently under construction suggests ongoing confidence in the sector.
Sustainable Features and Adaptive Reuse
Across all property types, two trends are increasingly important to Chattanooga tenants:
Sustainability Initiatives: Tenants are increasingly looking for buildings with energy-efficient systems, water conservation features, and other environmentally friendly attributes. This isn’t just about corporate responsibility, it’s about lowering costs to combat rising utility expenses.
Adaptive Reuse: Chattanooga’s rich architectural heritage provides multiple opportunities for adaptive reuse. We’re seeing continued interest in repurposed historic buildings that combine modern amenities with authentic character. These projects command premium rents while preserving our city’s unique identity.
Having started my career as an architect before transitioning to commercial real estate, I have a special appreciation for thoughtful building design and renovation. It’s been a privilege to be a part of so many of these historic properties coming back to life.
Looking Ahead: Commercial Opportunities in the Chattanooga Market
For tenants seeking commercial space in Chattanooga, 2025 presents opportunities across multiple sectors. The slight cooling in multifamily, combined with stable office conditions and tight industrial and retail markets, creates a balanced environment for strategic decision-making.
As your commercial leasing broker in Chattanooga, my team and I at SVN | Second Story is uniquely positioned to help you navigate these market conditions. With our team transaction volume up 77% in 2024, we continue to demonstrate our ability to deliver results in this market.
Whether you’re looking for office space leasing in Chattanooga, industrial property, retail locations, or multifamily investments, understanding market trends is the first step toward making informed decisions. The next step? Working with a CCIM candidate and experienced advisor who can help you translate these trends into practical strategies.
If you’re wondering how to lease a commercial property in Chattanooga or simply want to discuss your options in Hamilton County, give me a call! The right space is out there, and we can find it together.
Connect with me on LinkedIn.
Kelly Fitzgerald is Senior Vice President of Commercial Brokerage at SVN | Second Story in Chattanooga, licensed in Tennessee and Georgia. As the highest producer for SVN I Second Story in 2024 and recipient of the President’s Award, Kelly specializes in both the Chattanooga MSA and retail assets across Tennessee, Georgia and the greater Southeast.