Economy in Review

Chattanooga, Tennessee has a diverse economy with major industries including manufacturing, healthcare, and tourism. The city has experienced steady job growth in recent years, with the unemployment rate remaining below the national average. The Bureau of Labor Statistics reports that the largest employment sector in Chattanooga is trade, transportation, and utilities, followed by education and health services.

The U.S. Census Bureau reports that the median household income in Chattanooga is slightly below the national average, but the cost of living is also lower than many other cities in the United States. This makes Chattanooga an attractive location for businesses and residents alike.

Multifamily Market

The multifamily market in Chattanooga has been strong in recent years, with steady demand for rental units. The city has seen an increase in new construction of apartment buildings, particularly in the downtown area. Rent prices have also been on the rise, but remain affordable compared to other cities in the region.

Office Market

The office market in Chattanooga has been stable, with a vacancy rate that remains below the national average. The city has seen some new construction of office buildings in recent years, particularly in the downtown area. The healthcare industry is a major driver of demand for office space in Chattanooga.

Industrial Market

The industrial market in Chattanooga is strong, with a variety of manufacturing and distribution companies located in the area. The city's location at the intersection of major highways and rail lines makes it an attractive location for businesses that rely on transportation infrastructure. The industrial vacancy rate remains low, indicating strong demand for space.

Retail Market

The retail market in Chattanooga has been impacted by the growth of e-commerce, but the city still has a strong retail presence. The downtown area has seen an increase in new retail development in recent years, particularly in the form of mixed-use projects that combine retail and residential space. The vacancy rate for retail space remains below the national average.

Self-Storage Market

The self-storage market in Chattanooga has been growing in recent years, with new facilities being built to meet demand. The city's population growth and strong economy have contributed to increased demand for storage space. The vacancy rate for self-storage facilities remains low.

Hospitality Market

The hospitality market in Chattanooga is strong, with a variety of hotels and restaurants located in the city. The tourism industry is a major driver of demand for hospitality space, with attractions such as the Tennessee Aquarium and Lookout Mountain drawing visitors from around the world. The vacancy rate for hotels remains low, indicating strong demand for lodging.

Commercial Real Estate Loans by Purpose

There are many types of loans available for commercial properties in Chattanooga, and the best fit for you depends on your investment strategy. Here are some broad categories of financing available.

Permanent Financing

Permanent financing is a type of loan that remains in place for an extended period of time. It's commonly used to finance the acquisition of commercial properties or to refinance existing debt. Types of permanent financing include bank loans, loans from government-sponsored entities like Fannie Mae and Freddie Mac, HUD loans, credit union loans, loans from life insurance companies, commercial mortgage backed securities (CMBS) loans, and other types of loans depending on the specifics of the commercial property.

Refinancing a Commercial Real Estate Property in Chattanooga

I wouldn't quite call this a separate type of loan, but I have to mention refinancing in here. These are typically permanent loans (but not always) used to pay down an existing, partially amortizing or interest-only loan.

Often you may be able to time a refinance to happen after an interest rate drop — an ideal solution — but if your loan is maturing during a period of higher rates, you shouldn't stress too much about this. We'll work with you to find the best loan terms for your commercial property by reaching out to potentially thousands of lenders. Just complete the form below, and we'll get to it.

Construction Financing

Construction financing, also known as interim financing, is used to finance the cost of construction for commercial properties. It is usually a short-term loan that covers the cost of land development and building construction. Once construction is completed, the borrower can typically convert this into a permanent loan or pay it off with a new loan.

Bridge Loans

Bridge loans are a type of short-term loan that can be used to cover costs in the interim period between the end of one loan and the beginning of another. They are typically used in commercial real estate to finance the transition between construction financing and permanent financing. Bridge loans generally have higher costs than most other financing options and are often interest-only and non-recourse.

Commercial Real Estate Loans by Type

Depending on the purpose of your loan, you will have several financing options available to meet your investment goals. Read below to learn more about specific loan types.

Bank Loans

Bank loans are a common financing option for commercial real estate in Chattanooga. They can offer competitive interest rates and flexible terms, but the specifics can vary greatly from bank to bank. While they may not always be the best fit for larger, more complex projects, they can be an excellent option for smaller, simpler properties.

Life Company Loans

Life company loans are typically used to finance high-quality assets in major markets. They generally have lower loan-to-value ratios than most other loan types but offer competitive interest rates and long terms. However, they may not be suitable for riskier projects or properties in less established markets.

Agency Loans

Agency loans, offered by government-sponsored entities like Fannie Mae and Freddie Mac, are typically used for properties that are mostly multifamily. They offer attractive loan terms, low, fixed interest rates, and are non-recourse. However, there are restrictions on the amount of income that can come from other commercial uses.

HUD Loans

HUD multifamily loans are government-backed loans that are primarily used for the construction, substantial rehabilitation, purchase, and refinancing of multifamily properties. These loans offer long-term, non-recourse financing with competitive interest rates but have extensive requirements for qualification.

CMBS Loans

Commercial Mortgage Backed Securities (CMBS) loans are a type of mortgage-backed security backed by commercial real estate loans. Lenders focus more on the strength of the property than the borrower's credit, making them a good option for properties with strong cash flow.

SBA Loans

Small Business Administration (SBA) loans, such as the SBA 7(a) and SBA 504, offer attractive financing options for small businesses. However, the maximum amount for an SBA 7(a) loan is $5 million, while SBA 504 loans can go up to $20 million. They cannot be used for multifamily properties and are only available for properties that the business owner occupies.

Mezzanine Loans

Mezzanine financing is a hybrid form of financing that combines elements of debt financing and equity investment. It is typically used in commercial real estate to fill a funding gap between the primary loan and the total cost of a project.

Commercial Property Insurance in Chattanooga

This part isn't about loans, but it's just as important to your investment's success. Let's talk (quickly) about insurance.

Insurance premiums have skyrocketed in the past few years, as I'm sure you know. While multifamily gets a lot of the attention, rates for insuring anything from office buildings to shopping centers have jumped significantly.

Janover Insurance Group is dedicated to finding the best insurance solutions for your commercial real estate assets in Chattanooga. Click to get a free insurance quote for your property — no obligation.