(EDITOR’S NOTE: This is the final article in a two-part series focused on a trend in local commercial real estate that a 40-year veteran of the sector has never seen.)
By Tom Ballard, Chief Alliance Officer, PYA
Maribel Koella, Owner, Founder and Principal Broker at NAI Koella|RM Moore, has followed trends in all segments of the real estate market very closely for years. That level of knowledge and understanding are key factors in the firm’s success over the years, yet even she is fascinated with what she is experiencing now.
“Things are happening that I’ve never seen before,” Koella said in a recent interview. “People are discovering us,” something she attributes in part, but certainly not totally, to those who come here from around the country and beyond to visit the world-renowned Blackberry Farm resort or take delivery on their new Cirrus airplane at McGhee Tyson Airport.
For many, it’s no doubt their first visit, and they experience the beauty of the mountains and lakes, quality of life, and favorable climate. They may learn about the quality of the school systems and experience the absence of traffic that permeates big cities.
To illustrate the discovery point, Koella asked us if we knew that Knoxville is in the top 10 cities for migration of people from Chicago? Obviously, we did not. Neither were we aware that, at least in this region, she says, “There continues to be demand for hotel product in our area as we are not seeing the downturn in tourists like other areas of the country.”
“Doesn’t make sense,” Koella says, but quickly adds, “There’s been a trend happening, and the pandemic has exacerbated it.” Highly-regulated and high cost states are losing people, while those with better quality of life, more favorable climates, lower commuting times, and better schools are benefiting.
“We’re going to get more than our share in the future,” she says. The questions that we need to ask include these two – are we ready and do we understand the impact?
One area that concerns her is the impact on our infrastructure. “We have very little industrial inventory . . . not many spec buildings,” Koella says. That shortage will impact the ability to respond to companies that want to relocate here at a time when so many are considering relocating.
Like many residents of the area, she does not want to see traffic become gridlocked like is happening in Nashville. After all, shorter commute times is one of the quality of life issues that makes Knoxville so attractive.
Koella says the long-term impact on retail is still a moving target. She ticked-off a series of announcements that were about to be made at Alcoa’s 300-acre Springbrook Farm planned city center when COVID-19 hit. “You can’t get a big box now,” she says. “It will be junior boxes and small retailers.”
There’s also the matter of office space. Pre-pandemic, it was an ever-shrinking supply. Now, there is more space and a level of uncertainty about what will happen later in 2021 and beyond.
For a region that one might describe as conservative, Koella wonders how prepared long-time residents are for those who arrive from other parts of the country and bring with them their ideas and approaches to issues that might be somewhat different.
Again, to illustrate the point about cultural differences, she cited a question that she had never been asked through four decades of commercial real estate work.
“A company in California wanted to know the availability of prisoners as part of the workforce,” Koella said. That’s apparently not a problem in that state, but is not possible in Tennessee.
As she ponders the trends, the long-time Broker is clearly riding a big wave of interest in the community. “We are surprised at the level of interest in all product types, in our region, right now, despite the pandemic,” Koella says.