Expanding to Meet Growing Needs
According to a 2017 list by financial news website 24/7 WallStreet, Chattanooga is a top 10 metro city for job growth in the Southeast U.S., ranking #21 out of 388 cities on the national scale. In 2017 alone, approximately 10,000 jobs were added in the Chattanooga area – more than double the rate of the rest of the country. And new business entity filings continue to grow statewide and in Hamilton County, where 720 new businesses filed for state business licenses in the third quarter of 2018, up 13.4% from the previous year. These economic trends have led to an increased demand for commercial real estate, including industrial space, downtown apartments and mixed-use property, hotels, restaurants, retailers, and expanded health care facilities.
The 1,200-acre Enterprise South Industrial Park is nearly full with Volkswagen’s North American manufacturing headquarters, as well as Amazon’s 1 million-square-foot fulfillment center and auto suppliers Gestamp and Tag Manufacturing, among others. In 2018, Enterprise tenant Plastic Omnium completed a 16,359-square-foot addition to its plant. The previous year, FedEx opened its $30 million distribution center in the area as well.
On Chattanooga’s riverfront, the former Alstom facility was purchased by Chattanooga investors in 2018. Plans include creating a mixed-use area, including office, retail, and residential spaces, as well as keeping the former Alstom LEED Gold-Certified, state-of-the-art manufacturing facility for industrial use. In total, the riverfront site contains 112 acres.
Downtown population growth has directly impacted commercial real estate development. More than $1 billion in private investments has been poured into downtown Chattanooga since 2015. While the majority of development work has targeted housing – including apartment units, condos, and townhomes – these investments have also spurred nearly 1 million square feet in commercial space for offices, retail, and restaurants on the ground floor of housing.
In East Brainerd and Ooltewah, where population has been steadily growing, development continues for mixed-use spaces, apartments, health care, restaurants, and more.
Hamilton County’s thriving tourism industry, which brings in 15.6 million visitors annually, is directly correlated to the growth in hotel development, particularly high-end lodging. Two boutique hotels, The Edwin Hotel by Vision Hospitality and the Moxy Hotel by 3H Group, opened in 2018. Multiple developers have submitted plans to open several more boutique hotels in the coming years, including national brands Hotel Indigo, Aloft, Bode: Chattanooga, and Kinsley, another boutique hotel by Vision Hospitality planned for Chattanooga’s Southside. The historic Read House recently completed a $27 million renovation by Avocet Hospitality Group, and phase two of the project – which focuses on the Manor Building – is underway. Projected to open in the coming months are Tru by Hilton and Home2 Suites near Hamilton Place, both operated by Vision Hospitality. Atop Lookout Mountain, Scenic Land Company is moving forward with a $100 million upscale resort: the McLemore Resort Lookout Mountain, Curio Collection by Hilton.
Retailers and grocery stores are expanding and moving to the Chattanooga area to satisfy demand. Popular co-op REI, a department store, and new boutique retailers have recently opened in and around Hamilton Place Mall. The Hamilton Place area additionally welcomed a Publix supermarket. Two new retail centers, estimated at $18 million, are under construction in Ooltewah. Also in Ooltewah, Cambridge Square has grown to 10 buildings and 27 tenants in the past few years. Several new retail shops have opened in the Hixson area this past year, and new restaurants, from casual eateries to fine dining, have opened throughout the Scenic City as well.
Several of the largest hospitals are continuing to expand their facilities. CHI Memorial expanded its presence in North Georgia through the acquisition of Cornerstone Medical Center, formerly Hutcheson Medical Center, in Fort Oglethorpe. In 2018, Erlanger celebrated the official opening of the new Erlanger Heart and Lung Institute and Erlanger Behavioral Health Hospital, while continuing work on the Children’s Hospital at Erlanger and the newly opened Children’s Hospital Outpatient Center. Parkridge Medical Center is in the middle of a $28 million phase one capital expansion, part of their $62 million investment in the downtown facility.
As Chattanooga’s economy continues to strengthen, and the area sees steady population increases, sustained growth is expected for commercial real estate.