Report: Downtown Chattanooga beats national occupancy rates

Chattanooga’s downtown is outperforming national averages in several key metrics like office and retail space occupancy, according to a report released Wednesday from the River City Co.

Downtown office space is 93.6% occupied by square footage as of July, compared to the national record low of 79.6%, according to a press release about the report.

In addition to the city center and riverfront, the River City Co.’s footprint includes the North Shore, M.L. King Boulevard and Southside neighborhoods.

Retail space in the area is 97.3% occupied, compared to a 95.9% nationwide, according to the press release.

(READ MORE: How is downtown Chattanooga? Leaders see parking market at work)

The market conditions report is the first of its kind for River City Co., which plans to release similar reports on the downtown area twice a year.

The nonprofit was founded in 1986 to revitalize the area and hired its first senior director of economic development this year to help existing businesses and recruit new retail.

Since July 2024, 23 businesses have opened downtown, more than closed or relocated, the report found.

New businesses include record store Dallos Vinyl Love, bagel shop Hungry Mother, grab-and-go restaurant Keystone and high-end women’s boutique Monkee’s.

“That’s something that we should all really lift up and welcome and celebrate,” Emily Mack, CEO and president of River City Co., said at the nonprofit’s quarterly meeting Wednesday morning.

There are 19 projects under construction downtown, representing $636 million of investment, Mack said.

The projects include more than 650 hotel rooms, 1.2 million square feet of commercial space that is new or being renovated and around 1,800 residential units, Mack said.

Chattanooga’s downtown is outperforming national averages in several key metrics

‘PRESSURE IS ON’

There is 545,000 square feet of office space available on the downtown market across 24 properties and 102 spaces, the report found. There are 17 available retail spaces downtown with an asking rent of $21.64 per square foot.

“The pressure is really on nationally for downtown retail,” Mack said. “The reality is that if there’s an average performing retailer, that business is probably hurting.”

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City center restaurants Taco Mac and Sticky Fingers closed in June and July, respectively.

Chattanooga attracts 10.7 million visitors a year, Donna Harrison, vice president of engagement and impact at the Chattanooga Tourism Co., said at the quarterly meeting.

The average daily rate for downtown hotels so far this year is $159 with a 65.1% occupancy rate across 28 hotels and around 3,300 rooms, according to data from the Chattanooga Tourism Co. included in the report.

“I’m thrilled to see the new businesses opening their doors across our neighborhoods and the strategic growth in our hotel capacity so we can welcome people to our great city from all over the globe,” Chattanooga Mayor Tim Kelly said in the press release.

Contact business reporter Daniel Dassow at ddassow@timesfreepress.com or 423-757-6318.