Downtown Chattanooga continues to post strong performance across office, retail, hospitality and residential sectors, with more than $523 million in active construction projects, according to River City Company’s January 2026 Semi-Annual Economic Conditions Report.
The report, which analyzes market conditions within the River City Company footprint, highlights low vacancy rates and steady growth across multiple categories.
Office market
Downtown office vacancy stands at 5.6%, with approximately 487,000 square feet available across 28 properties and 96 available spaces. Class A space remains occupied at 94.4%, underscoring continued demand for premium office inventory.
The report’s 2025 workforce recap notes office activity from major employers including TVA (1,000 office workers returned), Unum (2,900 office workers returned), Total Quality Logistics (100 new office jobs) and Valerie Health (200 new office jobs). The Easy Building at 1413 Chestnut Street is among the properties currently available for lease.
Retail, commercial activity
Retail vacancy is reported at 5.5%, with 17 available retail properties and an average asking rent of $23.92 per square foot.
Between January and December 2025, many new businesses opened across downtown districts. In the city center, Atmosphere, Kitchen Collection, Monkee’s, Kendra Scott, Sweet E’s Children’s Boutique and VTX Club launched operations. Northshore welcomed Keystone Breakfast & Lunch, Lucky 37, Chattanooga FC Team Store, Pedestrian Wine & Cheese and Abide Salon. Southside added Studio Ours, 330 Main, Dallos Vinyl Love, Therapy 423, Camila, Orange You Glad, B-3 Studio, Bad Apple, Main Street Lounge, Barlery, Soul Food on Main and Let’s Paint by Zilly, while the MLK district saw the opening of Hungry Mother.
Hotel and hospitality
Hotel performance data for July through December 2025 shows an average daily rate of $159.60, revenue per available room of $103 and occupancy of 64.5%.
A major addition to downtown hospitality is The Waymark Tapestry Hotel, which opened in January following a $59 million renovation of the 1927 Chattanooga Savings Bank building. The 11-story property offers 148 rooms, a rooftop bar with 270-degree panoramic views, a speakeasy called “The Vault” and meeting space. The project received Preserve Chattanooga’s Preservation Project of the Year Award.
Additional hotel developments include the 185-room Embassy Suites, which opened in September 2025; the 144-room Waymark Hotel; the 123-room Caption by Hyatt, slated to open in early 2026; and a 200-room Drury Hotel, with an opening date to be determined.
Residential market
Downtown multifamily vacancy stands at 9.3%, with 358 vacant units. Average market rent is $1,599 per month, or $1.88 per square foot.
Unit types are heavily weighted toward smaller layouts, with one-bedroom units accounting for 49% of inventory, two-bedroom units making up 25%, studios comprising 20%, three-bedroom units representing 5% and four-bedroom or larger units accounting for less than 1%.
New housing developments include 34 units at 711 E. Main Street, six units at Arts View Townhomes on East Fourth Street, 17 units at Cardon’s Condos on Long Street, 32 units at Central Station on Central Avenue, 24 units at The Elizabeth on East Main Street, three units at The Madison on Madison Avenue, 18 units at Seven 50 MLK and 794 units at UTC First Hall on Oak Street.
Projects under construction
Sixteen projects are currently under construction within the River City Company footprint, representing more than $523.39 million in total investment. These projects include 348 hotel rooms and more than 1.14 million square feet of new or renovated commercial space, along with 18 new apartments and 144 new condominiums or townhomes.
Among the largest investments are the $114 million UTC First Hall project, a $70 million renovation of The Tivoli, a $59 million Hilton project, a $53 million Embassy Suites development and a $10 million HHM project.
Overall, the report reflects continued economic momentum in downtown Chattanooga, supported by new business openings, expanding hospitality offerings and substantial capital investment across sectors.
Source: River City Company