Flex Space with
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517 N Gay St, Knoxville, TN 37917
Historic commercial building with a Gay Street storefront, showroom areas, and warehouse space.
Property Size20,500 SF
Price / SF$121.95
Days on Market41
Property Features for 517 N Gay St
General Information
Standard status
Active
Size
20,500 SF
Property subtype
RETAIL
Zoning
DK-E
Site & Location
Highway Access
Yes
Road Access
Yes
Listing Agency:
Avison Young
(865) 617-2989
Listed By:
Justin Cazana · License #00295115
(865) 617-2989
Source:
Moodyscre
Added: Jul 22
Changed: Aug 30
Last Checked: Aug 30 at 7:24PM
Displayed information is deemed reliable but is not guaranteed and should be independently verified. All listing content including descriptions, pricing, images are the copyrighted material of Avison Young
Investment Insights
Based on property information with market context.
This commercial property contains approximately 20,500 square feet arranged around a prominent Gay Street storefront, showroom areas, and warehouse space. Its historic character and flexible DK-E zoning support continued retail or showroom operations, owner occupancy, creative adaptive reuse, or future redevelopment.
The property is at 517 N. Gay Street in Knoxville’s Downtown North district, with connectivity to downtown Knoxville and I-40. Potchke Deli, A Dopo Pizza, Parlor Doughnuts, Mac on 5th, the Old City, and Covenant Health Park are identified in the surrounding area. Free public parking is available beneath the I-40 viaduct.
Clayton Furniture is contracted to occupy the building through 2027. The developer is under contract to acquire the property but does not yet hold title.
The property is at 517 N. Gay Street in Knoxville’s Downtown North district, with connectivity to downtown Knoxville and I-40. Potchke Deli, A Dopo Pizza, Parlor Doughnuts, Mac on 5th, the Old City, and Covenant Health Park are identified in the surrounding area. Free public parking is available beneath the I-40 viaduct.
Clayton Furniture is contracted to occupy the building through 2027. The developer is under contract to acquire the property but does not yet hold title.
Key Highlights
- Approximately 20,500 square feet of commercial space
- Gay Street storefront combined with showroom and warehouse areas
- Flexible DK‑E zoning
Financial Insights
Estimated NOI and Cap Rate
NOI = area × lease_rate × (100 − vacancy) / 100 × (1 − expense_ratio). Net Operating Income — what the owner takes home each year before mortgage payments and income tax. Effective rent (asking rent minus vacancy losses) minus operating costs (taxes, insurance, maintenance, management).
NOI / Yr
$178,448
Cap rate = NOI / list price × 100. Capitalization rate — annual return on a fully cash purchase, before financing. NOI divided by price. Higher means more income per dollar invested, but usually also more risk or older condition. 5–8% is typical for stabilized commercial property; double digits often signal distressed deals.
Cap Rate
7.14%
Suggested Prices Based on Cap Rates
Cap rates vary significantly by property type, market, and asset quality.
Typical U.S. stable-market ranges:
Multifamily — 4.5% to 6.5% (Class A in primary markets often sub-5%; Class C in secondary markets 6%+)
Industrial / Logistics — 5.0% to 7.0% (compressed heavily in recent years due to e-commerce demand)
Office — 6.5% to 9%+ (wide spread post-2020; CBD Class A vs. suburban Class B varies dramatically)
Retail — 5.5% to 8.5% (grocery-anchored on the low end, unanchored strip centers higher)
Hospitality / Hotels — 7.5% to 10%+ (higher due to operational risk)
Self-Storage — 5.5% to 7.5%
Medical Office — 6.0% to 7.5%
Net Lease (single tenant, credit) — 5.0% to 7.0% depending on tenant credit and lease term
Rules of thumb:
Primary markets (NYC, SF, LA, Boston, DC) trade at lower cap rates than secondary/tertiary markets, often by 100–200 bps (bps, aka basis points; 1 bp = 0.01%).
Class A assets trade ~50–150 bps tighter than Class B, and Class B tighter than Class C.
Cap rates move inversely with price — a lower cap rate means a higher price for the same NOI.
Spread to the 10-year Treasury is a common benchmark; historically 200–400 bps over the 10-year.
Cap Rate 5%
$3,568,960
$3.6M
Cap Rate 7%
$2,549,257
$2.5M
Cap Rate 9%
$1,982,756
$2.0M
Market Conditions
NOI Build-Up for 20,500 SF
Vacancy — income lost from leasable area expected to sit empty during the year, subtracted from gross rent.
EGI (Effective Gross Income) — gross rent minus vacancy losses, the realistic income before paying operating costs.
OpEx (Operating Expenses) — recurring costs to operate the property (property tax, insurance, utilities, maintenance, management); excludes financing and capital improvements.
NOI (Net Operating Income) — income a property generates after operating costs but before financing and taxes.
Gross rent
$295.2K $14.40/SF
− Vacancy
−$20.7K −$1.01/SF
EGI
$274.5K $13.39/SF
− OpEx
−$96.1K −$4.69/SF
NOI
$178.4K $8.70/SF
Area
Knoxville, TN
Vacancy
7.00%
Lease Rate
$14.40 /SF/Yr
Expense Ratio
35.00%
Simulate Cap Rate and NOI
Suggested Prices Based on Cap Rates
Cap rates vary significantly by property type, market, and asset quality.
Typical U.S. stable-market ranges:
Multifamily — 4.5% to 6.5% (Class A in primary markets often sub-5%; Class C in secondary markets 6%+)
Industrial / Logistics — 5.0% to 7.0% (compressed heavily in recent years due to e-commerce demand)
Office — 6.5% to 9%+ (wide spread post-2020; CBD Class A vs. suburban Class B varies dramatically)
Retail — 5.5% to 8.5% (grocery-anchored on the low end, unanchored strip centers higher)
Hospitality / Hotels — 7.5% to 10%+ (higher due to operational risk)
Self-Storage — 5.5% to 7.5%
Medical Office — 6.0% to 7.5%
Net Lease (single tenant, credit) — 5.0% to 7.0% depending on tenant credit and lease term
Rules of thumb:
Primary markets (NYC, SF, LA, Boston, DC) trade at lower cap rates than secondary/tertiary markets, often by 100–200 bps (bps, aka basis points; 1 bp = 0.01%).
Class A assets trade ~50–150 bps tighter than Class B, and Class B tighter than Class C.
Cap rates move inversely with price — a lower cap rate means a higher price for the same NOI.
Spread to the 10-year Treasury is a common benchmark; historically 200–400 bps over the 10-year.
Cap Rate 5%
$3,568,960
Cap Rate 7%
$2,549,257
Cap Rate 9%
$1,982,756
Alternative Uses
Best Use
Retail
$4.21M
$3.68M – $4.91M
NOI $294,462 @ 7.0% cap · market cap 11.78%
Second Best
Flex RnD
$2.55M
$2.23M – $2.97M
NOI $178,448 @ 7.0% cap · market cap 7.14%
Theoretical Best
Office A
$5.08M
$4.44M – $5.92M
NOI $355,421 @ 7.0% cap · market cap 14.22%
Zoning and permitted uses should be independently verified with authorities.
Property Analytics
Property Profile
Current Use
Lease Details
Yes
Highway access
Yes
Paved road access
Location Intelligence
Trade Area within ½ mile
3,350
Businesses Nearby
Well-served
Demand for This Use
Explore this area
Business Placement
Demographics for 37917, TN
25,013
Population
14,216
Households
1.8
Avg Household Size
39
Median Age
31%
College-Educated
87%
High-School Grad
9.5 sq mi
ZIP Area
2,633
Density / Sq Mi
$51,232
Median Household Income
$37,853
Median Earnings
$1,063
Median Rent
$189,100
Median Home Value
Market
Vacancy Rate% for Industrial in South region
Questions? Ask Rey
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Frequently Asked Questions
What type of property is this?
Flex space - Historic commercial building with a Gay Street storefront, showroom areas, and warehouse space.
Where is this flex space located?
The property is located at 517 N Gay St Knoxville, TN.
What is the asking price?
The asking price for this property is $2,500,000.
What are key features of this property?
This property features: Approximately 20,500 square feet of commercial space; Gay Street storefront combined with showroom and warehouse areas; Flexible DK‑E zoning
