2600 Western Ave 55,000 SF Office Building Knoxville, TN 37921 $7,500,000 ($136.36/SF) 8% Cap Rate

2600 Western Avenue presents an opportunity to acquire a government-leased office investment in Knoxville, Tennessee. The property was purpose-built in 2009 for the Tennessee Department of Children's Services (DCS), a state agency responsible for child welfare and family services throughout Tennessee. The tenant recently executed a new 10-year lease renewal through November 30, 2035, providing long-term income stability backed by the credit of the State of Tennessee.
The ±55,000-square-foot facility sits on approximately 9.11 acres and is strategically located in West Knoxville with convenient access to Interstate 40 and Interstate 640. The property includes 270 surface parking spaces, an 18-foot ceiling height, and HVAC systems replaced in 2024. The tenant currently occupies approximately 48,522 square feet under a modified gross lease structure and is responsible for utilities and janitorial expenses. Annual rent increases of 50 basis points provide built-in income growth over the lease term.
A distinguishing feature of the offering is its value-add potential. Approximately ±6,478 square feet is expected to become available for lease, creating an opportunity to increase future income. In addition, the property includes an adjacent ±3.38-acre buildable site with capacity for an estimated ±20,000-square-foot or larger building, offering future development flexibility.
Knoxville continues to benefit from strong economic fundamentals supported by the University of Tennessee, Oak Ridge National Laboratory, healthcare institutions, logistics infrastructure, and ongoing federal investment. The local office market remains healthy, with vacancy rates well below national averages and limited new office construction supporting long-term demand.