Downtown Knoxville's Housing Market

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Downtown Knoxville's Housing Market Reqas Square The Overlook The Crozier Residential growth downtown started slowly in the early 2000s, gained traction within about fi ve years, and picked up steam in the last couple of years as accelerated growth has been observed. Technical Report Series Based on the many projects in the development pipeline and the inventory of additional underutilized properties in the area, we expect to see continued housing growth that will strengthen our DOWNTOWN already vibrant downtown. KNOXVILLE HOUSING City House MARKET METROPOLITAN PLANNING COMMISSION The Metropolitan Planning Commission assembles and maintains technical reports, development activity reports, demographic data, and other publications detailing economic activity in the City of Knoxville, Knox County, and the metropolitan area. Visit our website (www.knoxmpc.org) for more information. July 2018 Jeff Archer, Principal Planner Terry Gilhula, Research Manager Nick Schoenborn, GIS Analyst jeff [email protected] [email protected] [email protected] (865) 215-3821 (865) 215-3819 (865) 215-3805 Suite 403 • City County Building • 400 Main Street • Knoxville, Tennessee 37902 • (865) 215-2500 • www.knoxmpc.org Downtown Knoxville is a vibrant activity center. A key component to its success has been residential growth through public and private sector investment partnerships. These collaborative efforts have resulted in redevelopment and conversion of older multi-story structures and, most recently, new construction. Investments in downtown’s infrastructure and non-residential properties, such as retail shops, restaurants, and offices, have bolstered the area’s housing market, as has investment in adjoining areas, such as the University of Tennessee campus, Cumberland Avenue, Downtown North, Magnolia Avenue corridor, and PropertyPropery Types Type Map 2: Downtown Knoxville Underdeveloped Property C T Y the South Waterfront. O S SurfaceO Parking Lot P O N S E T R Vacant/UnderdevelopedS EM T ORY PL KING ST B L A VE N GAY ST C W FIFTH A K E FIFTH AVE S S AVE T RICHARDS ST DANIEL IFTH AVE O W F C K E V N A IA A V VAN ST E E MAGNOL H A L R L AN OGDEN O MO H DOL F U I40 R F ¨¦§ M G A P E N A H MAGNOLIA AVE M S W S N S S T E C T S T E D T N R AVE N F T SO K L E R JAC T AV E OR O A DEP AVE W L LL I BE T D P U N CAM L S A I GAY ST P T A S V T E OAK AVE Y A E P V W W A ATT LO D WIL A STATE O E O V N R ON A KS S B JAC W T N ST S B R O W VINE AVE E SUM A MI GRAND AVE T HI D L L DR L W U A L A W Y E W SUMMIT HILL DR J S P E ST A AV O T E S R C M ORE N W F A E E V E N L E S L T W H R W D O E WALL AVE R A R N S H L L L D I H E T HIGHLAND AVE S S Y A E T FAIR L PA S P L TW R T K K O FOURTEE ELFTH W F D UNION AVE R 2 F Y A ME LAUREL AVE ST NTHST J ELEVENTH ST D A M R E CLINCH AVE CLINCH AVE MARKETST S A G E E W L S E OCUST STOCUST H AV WHITE AVE A HURC T W CHURCH AVE E C L N U T S T CUMBERLAND AVE M POPLAR S POPLAR I D MAIN ST D E MAIN ST C L S I E R T A D C L R B E R T D O E HILL AVE R O W HILL AVE W HILL AVE K R D FRONT AVE R NEYLAND D 15 S G A Y S ¯ T L P IL NC COU FUTURE DEVELOPMENT This technical report examines Andrew Johnson Building Southeastern Glass Company Future residential development in downtown includes 16 announced projects, Knoxville’s downtown residential contributing 1,183 new units to the existing inventory (Table 5): growth in detail, examining the current • New apartments will outpace owner-occupied units by more than 4 times. housing inventory, annual additions, investments, property sales, rental rates, • New supply will be a mix of conversion properties and new construction. and proposed future developments. Notable among conversions is the Supreme Court building on Locust Street. That • For our purposes, downtown is defined project is estimated to deliver 230 units. as the area bounded by Interstate 40, • New construction, however, will lead the way among upcoming residential projects: James White Parkway, Tennessee River, Marble Alley II, The T at Riverfront, Stockyard Lofts, and Regas Square will combine and World’s Fair Park. Further, we have for 687 new units. delineated three downtown residential Table 5: Downtown Knoxville Announced Residential Developments submarkets: North, Central, and South (Map 1). Units Name Address Owner- Rental Occupied Total INVENTORY OF RESIDENTIAL UNITS The T at Riverfront Locust Street/Hill Avenue 287 287 Downtown METROPOLITANincludes 1,103 parcels Supreme Court 719 Locust Street 230 230 of land, totalingPLANNING 378 acres, with 99 COMMISSION Stockyard Lofts 215 Willow Avenue 152 152 residential developments and 1,833 Marble Alley II 121 Union Avenue 147 147 housing units, comprising an average density of 4.8 units per acre. A detailed Regas Square 333 Depot Avenue 101 101 inventory of all housing properties Andrew Johnson Building 912 S Gay Street 75 75 downtown is provided in Table 1. 1894 Saloon Building 205 Depot Avenue 205 Depot Avenue 48 48 Keener Lighting 701 World’s Fair Park 33 33 North Submarket Pryor Brown Garage 322 W Church Avenue 30 30 As more residential conversion of older This area records 47% of downtown’s The Crozier 120 S Central Street 25 25 properties occurs downtown, available supply of condos and apartments. In The Mews II 351 Ogden Street 20 20 vacant/underutilized buildings are fact, over half (54%) of all downtown becoming scarcer. As a result, new rentals (apartments) are found in this Century Building 312 S Gay Street 12 12 housing investment will look to submarket. Contributing to that The Overlook 608 W Hill Avenue 10 10 vacant land, surface parking lots, inventory is Summit Towers Apartments City House 519 W Vine Avenue 7 7 and underdeveloped parcels. Map 2 – its 277 units comprise downtown 612 Professional Condos 612 S Gay Street 3 3 shows the location of these potential Knoxville’s largest residential building. investment areas. The submarket’s newest residential 107 Commerce 107 Commerce Avenue 3 3 units are in The Daniel, a former Total Units 972 211 1,183 clothing manufacturing facility that Rental/Owner-Occupied Shares 82% 18% has been renovated and converted into 70 apartments. Source: Central Business Improvement District, 2017 Century Building Pryor Brown Garage White Lily Flats Jackson Ateliers 14 3 Since 2000, the infl ation-adjusted price per square foot of downtown condominiums Rental Market Marble Alley Lofts has more than doubled, from $103 in 2000 to $239 in 2016 (Figure 8). A few notable There are 1,341 rental units downtown, growth trends occurred along the way: representing 73% of the overall housing • From 2000 to 2005, when sales were slow, the price per square foot was more volatile. inventory. The median value of a downtown rental is $852, compared to • From 2006 through 2012, as inventory grew, price per square foot climbed, until the $808 across Knox County (Table 4). recession led to price cuts. Table 4: Since 2012, sales momentum has picked up, and the price per square foot has • Median Rental Market Rates increased every year since. Rental Type Downtown Knox County All unit types $852 $808 Figure 8: Downtown Knoxville Residential Sales, Price Per Square Foot, 2000-2016 Studio $1,029 $552 $250 1 bedroom $671 $657 2 bedrooms $1,307 $816 3 bedrooms $1,640 $1,015 $200 Source: U.S. Census Bureau, 2012-2016 $150 JFG Flats $100 $50 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Central Submarket Source: Knoxville Area Association of Realtors, 2017 Tailor Lofts The Central submarket contains 33% of all downtown housing units. Comprising a sizable share of the area’s inventory are newly-constructed units, including Marble Alley Lofts, with 248 apartments. Further, the fi ve largest venues of the 33-property Upper story residential units on S. Gay Street submarket combine for over 60% of its total supply. Arnstein Building 4 13 The Holston Cherokee Building Ely Building Figure 6: Downtown Knoxville Residential Sale Prices, 2000-2016 Medical Arts Building 100 $400,000 90 Average Sale Price (2017 dollars) $350,000 80 $300,000 70 $250,000 60 50 $200,000 Units Sold 40 $150,000 30 $100,000 20 802-804 W. Hill Avenue $50,000 10 0 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Knoxville Area Association of Realtors, 2017 Pricing Infl ation-adjusted average sale prices of downtown condominiums have seen substantial growth since 2000, climbing from an average of $130,242 in 2000 to $297,350 in 2016, peaking at $388,258 in 2014 (Figure 6). A few notable exceptions to the growth trend occurred along the way: 612 S. Gay Street • Post-recession, between 2009 and 2013, downtown’s average residential sale prices moved up and down, the net eff ect of which was fl at performance, showing a start year and end year diff erence of only $4,274.
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