Knoxville’s appeal to employers and job-hunters should make it attractive to investors seeking stable growth in a market that outperforms its size, Michael Zaransky writes.
As the multifamily housing market continues to reset from its recent supply surge, investors view 2026 as a transitional year, particularly in overbuilt markets grappling with multiple economic uncertainties. According to the National Apartment Association, 2026 investors will gravitate toward “resilient, supply-constrained” markets with growing populations and strong job markets. One U.S. city meets those criteria and more.
Welcome to Knoxville, Tennessee, one of the nation’s most desirable mid-sized cities and a location ripe for investment. The East Tennessee city soars with possibility. An energetic economy and burgeoning startup culture are drawing more young workers and families to one of the Southeast’s most attractive cities, located near the Great Smoky Mountains.
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According to moveBuddha, Knoxville will be the most popular U.S. city for 2026 move-ins attracted to the job opportunities, thriving university culture and outdoor recreational escapes. Yet unlike some other Sun Belt cities, Knoxville doesn’t suffer from a rental supply glut. In fact, Knoxville faced a 23,000-unit undersupply in 2025, according to the East Tennessee Realtors.
Now is a great time for multifamily investors to consider Knoxville. Here’s why MZ Capital Partners looks to expand its portfolio in the market.
Knoxville is a market performer
We have invested in Knoxville for two decades and have found it to be an excellent multifamily market. In 2023, MZ Capital Partners expanded into the region’s build-to-rent market, acquiring The Residences at Devanshire. This 87-home community in West Knoxville features three-bedroom, two-bath houses with attached garages, valued by young families and retirees. The community has generated robust demand in an MSA that remains undersupplied.
The East Tennessee Realtors Association found that regional construction never really caught up following the 2007 housing and financial crisis. According to the association’s 2025 report, housing now remains “stuck in the middle,” making progress but still lagging in all income levels.
Undersupply contributed to home prices increasing by 45 percent from 2020-24, when affordability reached a 40-year low, the ETR study found. The need for units expands to multifamily.
While other Tennessee markets, such as Nashville and Chattanooga, have seen growth stall, Knoxville is booming. Multi-Housing News ranked Knoxville fifth among its top-10 emerging markets, citing some of the region’s positive economic data.
Knoxville sets a strong economic pace
Tennessee, and Knoxville in particular, expect population growth to continue as job opportunities increase. The University of Tennessee’s Boyd Center projects continued statewide economic growth in 2026, albeit at a more modest pace, with Knoxville at the center of that growth.
The Knoxville MSA enjoyed lower unemployment (3.2 percent in September 2025) than the national average and lower prices for food and energy, according to the U.S. Bureau of Labor Statistics. Non-farm employment grew by 1.8 percent in mid-2025, the BLS reported.
Knoxville is home to some of the state’s most stable and growing employers. The University of Tennessee is a major research institution. The Department of Energy’s Oak Ridge facility seeks to become a hub for nuclear technology. Pilot, which operates a nationwide network of travel centers, is headquartered in Knoxville, while Clayton Homes, a leading U.S. builder of modular homes, is located in nearby Maryville.
As a result, Knoxville’s population, which has maintained an upward trajectory since 2020, could grow by as much as 15.2 percent by 2040, the Tennessee State Data Center projects. Knoxville has developed an ambitious plan to serve this anticipated growth.
In 2024, the Knoxville Chamber of Commerce launched the 2030 Protocol to advance technical education, recruit AI-focused talent and support technology startups. The initiative’s goals include raising average annual salaries to rival those of competing tech markets like Nashville, Memphis and the Research Triangle of North Carolina.
It also seeks to recruit more 25- to 54-year-olds, a population group that saw just 7 percent growth in Knoxville over the past 12 years. The demographic should be drawn to Knoxville beyond jobs and cost of living.
The ‘Scruffy City’ has many charms
According to moveBuddha, Knoxville hits a quality-of-life sweet spot as a Southern mid-sized city anchored by a university. Knoxville has so much appeal: a timeless Southern downtown enriched by an energetic and diverse community and the thriving University of Tennessee.
Tennessee’s Neyland Stadium is the nation’s sixth-largest venue, with a capacity of 101,915. The Knoxville Smokies, a minor-league baseball affiliate of the Chicago Cubs, began playing in a new downtown stadium in 2025. The Bassmaster Classic, known as the Super Bowl of Bass fishing, returns to Knoxville in 2026.
The Knox Asian Festival is among the nation’s largest pan-Asian events, and the city hosts a thriving cultural scene with a growing Ale Trail. Meanwhile, the renowned Great Smoky Mountains National Park is just over an hour away, while nearby Dollywood is among the top-20 most visited theme parks in the country.
Knoxville revels in its “Scruffy City” nickname, born from the perception that it was too small to host the 1982 World’s Fair. The event ultimately drew more than 11 million visitors, and Knoxville has been thriving since. The city’s appeal to employers and job-hunters should make it attractive to investors seeking stable growth in a market that outperforms its size.
Michael H. Zaransky is the founder and managing principal of MZ Capital Partners in Northbrook, Illinois.
