By DON FENLEY

ON THE RADAR

Kingsport-Bristol retail: A 351,855 SF absorption loss paired with only 4.0% vacancies to large-block closures. The backfill timeline will determine whether the vacancy drifts materially higher.

Knoxville multifamily: Only market with negative rent growth (-0.6%). Supply additions must slow, or absorption must accelerate for stabilization.

Knoxville industrial & office: Both sectors show negative absorption despite low vacancy.

Morristown: Best composite performance in the region: lowest or near-lowest vacancy in multifamily and office, positive absorption across all three tracked sectors, highest rent growth in industrial and retail.

REGIONAL ROUNDUP

 Industrial leads the region’s commercial market with a sub-5% vacancy rate and rent growth near 3% in every submarket. Office is defying national distress trends, with vacancy below 3.5% across the board. Retail rents are rising everywhere, but tenant contractions in the Kingsport-Bristol and Johnson City metro markets are a signal worth watching. Knoxville multifamily is in a supply-driven correction. It’s the only sector posting negative rent growth in the dataset.

INDUSTRIAL

Industrial is the region’s strongest commercial sector. Rent growth of 2.7% to 3.1% and vacancy rates as low as 1.0% in the Johnson City metro reflect demand that’s consistently outpacing available supply. Kingsport-Bristol and the Johnson City metro together absorbed over 268,000 square feet of net space over 12 months. Knoxville’s -333,005 SF absorption deficit against 1.9% vacancy is the sector’s key anomaly. It’s likely tied to large-block lease expirations not yet backfilled rather than broad demand weakness. Morristown posted the highest rent growth in the sector at 3.1% despite a small negative absorption figure, confirming landlords there retain strong pricing power.

MULTIFAMILY

Knoxville’s multifamily market is in a supply cycle correction. Vacancy reached 8.8%, the highest in the region across any sector, while rent growth turned negative at -0.6%. It’s the only such reading in the dataset. The market absorbed 1,136 net units. It’s a large figure that could not keep pace with new deliveries. Morristown is the counterpoint. It has a 3.3% vacancy rate and 1.8% rent growth. That reflects a tight, supply-constrained market anchored by manufacturing employment. Kingsport-Bristol and the Johnson City metro are broadly stable, posting 1.0% to 1.2% rent growth with vacancies in the 5.7% to 6.3% range. Both are manageable levels that do not yet require landlord concessions.

OFFICE

The region’s office sector is outperforming national benchmarks significantly. All four markets posted rent growth of 1.8% to 2.0% and vacancies below 3.5%. Morristown is at near-full occupancy. It has a 1.2% vacancy rate. Kingsport-Bristol absorbed 92,676 square feet of net space. That’s solid demand, likely tied to healthcare and professional services growth. Knoxville’s -95,040 SF absorption figure parallels its industrial sector: concentrated tenant consolidations rather than market-wide distress, given that vacancy remains low at 3.2%. These markets’ smaller scale and limited Class A pipelines provide insulation from the remote-work-driven vacancy cycles battering larger metro office markets.

RETAIL

Retail rent growth is positive in every market (1.9% to 2.5%). It a regional sign of underlying landlord strength even where absorption is contracting. Kingsport-Bristol’s -351,855 SF net absorption is the largest negative figure in the dataset. At 4.0% vacancy, the damage has not yet registered sharply. That suggests the contraction is concentrated in large-format or anchor spaces rather than distributed across the portfolio. If backfilling is slow, vacancy could move higher in coming periods. The Johnson City metro posted a smaller contraction of -54,617 SF. Knoxville is the retail sector’s strongest performer, absorbing 93,520 square feet on continued demand in its major retail nodes. Morristown added a modest 14,495 SF of net absorption, consistent with steady workforce-driven retail demand.

Methodology: 12-month trailing metrics as of March 2026 for rent growth, net absorption, and vacancy across industrial, multifamily, office, and retail sectors for the Kingsport-Bristol, Johnson City metro, Knoxville, and Morristown markets. Multifamily absorption in net units; all other figures in square feet. Analysis by CoreData and Claude. The data source is the National Association of Realtors (NAR) analysis of CoStar data..

Categories: TRENDS