Q2 2012 Chattanooga, Tennessee Commercial Real Estate Economy

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Q2 2012 Chattanooga, Tennessee Commercial Real Estate Economy

“Consistently ranked as one of America’s best mid-sized cities, Chattanooga once again proved its resilience throughout the Great Recession,” Southeast Real Estate Business reported in July. “While the nation was mired in considerable economic turmoil, Chattanooga not only weathered the storm but built on its strong foundation.” Along these lines, planning for a new massive auto manufacturing plant began in 2008 (see below). That said, Chattanooga did suffer substantial losses during the period of recession. It’s the performance thereafter that has been especially strong. According to data provided by the U.S. Bureau of Labor Statistics (BLS), total non-farm employment as of August was up 2,700 jobs (1.2%) over 12 months and was up 6,900 jobs (3.0%) over 24. All the same, employment per August remained down fully 12,400 jobs (4.5%) from five years prior.

A main factor in the local economy’s recent resurgence has been expansion in its Manufacturing sector, and in automobile manufacturing in particular. Accordingly, Volkswagen North America completed a $1 billion, 2.5-million-square-foot assembly plant in Enterprise South Industrial Park in east Chattanooga in 2011. With hiring now complete (barring future expansion), the facility employs 3,350 personnel, the Detroit Free Press reported at the end of July 2012. “As Europe’s auto industry tumbles deeper into an economic mess, German automaker Volkswagen is clinging ever tighter to its one-year-old plant in the Tennessee Valley as a vital component to its U.S. expansion,” states this source. According to BLS data, employment in Manufacturing per the latest August was up fully 2,400 jobs (7.9%) year-over-year and was up 3,700 jobs (12.4%) since August 2010. Including facilities in Nashville, The Chattanoogan reported in July citing Business Facilities’ annual rankings, Tennessee placed first in the nation in “automotive manufacturing strength” for the third consecutive year. In addition, a new, $300 million turbine manufacturing plant for Alstom, completed in Chattanooga this year, and will employ 320 workers by early 2013, the Times Free Press reported in August.

Meanwhile, the distribution segment also has seen significant new activity in the form of two new distribution centers for Amazon.com. Last year, the online retail giant, expanding in a number of cities throughout the nation, announced $139 million in total investment in two new facilities, one in Chattanooga and one in Charleston, TN (Bradley County) to the east. In addition, a $120 million downtown waterfront revitalization project has “bolstered” the city’s growth, as reported by Southeast. And in a consolidation of local offices, Blue Cross Blue Shield recently “reinvested” in the city with the construction of a new, 950,000-square-foot headquarters facility.

The local housing market also continues to improve. According to Greater Chattanooga Association of Realtors as reported by the Times Free Press in September, August was the 10th consecutive month to see increasing year-over-year sales volume: a 7.6% gain since August 2011 resulted in the completion of 655 transactions. At $136,250, the median selling price for the month was up 5.6% from a year earlier. In addition, average time on market declined 6.7% to 125 days. With respect to the economy, noted a top association executive, “there’s a reason for optimism going into the last third of 2012 and even into 2013, and housing is actually playing a large role in that positive outlook.”