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Will Thousands of New Apartments on the Strip Ease Knoxville's Housing Shortage? Well, It's a Start 
What does new housing on The Strip really mean for students – and will the addition of thousands of new apartments affect escalating rent prices?

In this first of a 2-part report, read a sit-down discussion with Dr. Scott Gilpatric, head of the University of Tennessee Department of Economics.

Scott Gilpatric

Dr. Scott Gilpatric

Cumberland Avenue, facing westward

Cumberland Avenue, facing westward

Hub on Campus: 800 apartments, 30,000 SF of retail, a parking garage

Student housing in Knoxville has undeniably become harder to secure and more expensive. Multiple large apartment complexes have been constructed in recent years, aimed at serving UT students – and yet, supply still lags behind demand as UT grows.

Earlier this year, construction of Hub on Campus – a transformative private development that will include more that 800 apartments, 30,000 square feet of retail space and a 10-story parking garage – got underway.

Cranes rise above the Hub on Campus construction site

Cranes rise above the Hub on Campus construction site

Over the course of coming years, the Hub's four 8- to 10-story buildings will span four blocks on both sides of Cumberland Avenue.

Mayor Indya Kincannon – a proponent of increasing housing stock in Knoxville at all price points, particularly affordable housing – pointed out the benefits of the half-a-billion-dollar private investment.

"Hub on Campus brings much-needed housing in a big way, and more apartments eases both the citywide shortage and the University of Tennessee's shortage," the Mayor said in February, as construction began. "Increased housing availability drives down rent prices citywide."

But of immediate concern to students: When will rent prices dip?

Dr. Gilpatric concurred that the basic increase in supply will be beneficial in lowering the equilibrium price, although he followed up that it is important to note – not everything is equal in housing.

In short, he said, “it’s complicated.”

Could demand for housing still outpace new construction?

The implication of newer and nicer housing may result in an increase in price in that specific area or a particular street, but the sheer additional capacity ideally would and should relieve the pressure of other housing options in the surrounding area, Gilpatric said.

There is also a possibility that demand continues to rise as these new developments are built by a continued influx in UT admissions, he said.

“The pace at which demand is growing might outpace the pace at which supply is growing,” which would in turn defeat the benefit to students looking for a more affordable housing option, Gilpatric says.

The Brookings Institute in a 2020 analysis emphasized the need for a variety of housing options, coupled with sweeping policy changes, as a strategy for reducing or at least containing rent costs.

“Building more housing, especially smaller housing, will over time bring down housing costs (or at least keep them from rising as quickly),” Senior Fellow Jenny Schuetz wrote in her analysis of housing affordability

High cost of rent? Factor in driving, quality of life

What should students pay attention to, economically, in regards to Knoxville and campus?

Where you live can change the way you live your life, especially as a student. There are several cost and benefit analyses to consider, Gilpatric said.

Most students' initial thought is to move further away from campus when fighting housing costs, but there is often a lack of consideration this can have on quality of life depending on what an individual is wanting out of their college experience.

Living further out also usually means having to drive, which then means having to buy a parking pass, and then looking for parking every day on campus. If an individual does choose to drive, Gilpatric also cautioned that it is easy to underestimate the value of a vehicle and the underlying costs associated such as gas and more frequent maintenance.

Think globally, go green

The wear and tear of a vehicle is not the only consideration in thinking about transportation. Think globally. Carbon emissions matter.

This focus of reducing greenhouse gas emissions is another factor in the discussion about availability of proximal housing to the University or the workplace or schools.

In 2008, the City of Knoxville set goals to reduce greenhouse gas emissions 20 percent by 2020 (relative to 2005 levels) for both municipal government operations and the broader community. In 2019, City Council unanimously adopted two new goals to align with the Paris Climate Agreement and U.S. Climate Mayors:

- A 50 percent reduction in greenhouse gases for municipal government operations by 2030 (from 2005 levels)

- An 80 percent reduction in greenhouse gases for the entire community by 2050 (from 2005 levels)

The City is ahead of schedule to meet its emissions target, but emissions from the Knoxville community have been increasing since 2012. About 60 percent of Knoxville’s emissions come from transportation, particularly cars and trucks fueled by gasoline – which makes a clear case for development that gives residents the option of accessing groceries, school, work and entertainment without a car.

Fewer miles driven, especially in urban settings, means fewer emissions.

The average Knoxville resident emits about 1 pound of carbon dioxide equivalent for every mile we drive. That’s equivalent to the emissions from burning about half a pound of coal or charging your phone 50 times. 

And those tailpipes don’t just emit greenhouse gases that cause climate change – they also emit chemical compounds and solid particles that stay local, forming smog and triggering heart and lung symptoms for Knoxville residents.

Avoiding driving whenever possible is the best way to reduce your impact on Knoxville’s air quality and the global climate.

Stately houses still line streets throughout Fort Sanders

Iconic scenes from Fort Sanders

Iconic Fort Sanders house

Housing, businesses may continue to 'grow together' 

What's the economic impact of the influx of students or increasing the housing development on the Strip?

Ultimately, the businesses on the Strip are going to be there to serve the students, which is reflected even in the way housing is built currently. Retail storefronts occupy the ground floors in most apartment buildings along Cumberland.

Gilpatric is hopeful that the housing industry along the Strip and the local business industry will “grow together” as they are attracting the same audience.

The growth of students is also increasing demand for entertainment and food in the area, which is good for businesses. The downside is seen more in a distributive sense, especially among lower-income students or long-time residents around the area. According to Gilpatric, the growth, while economically positive, still may not fully address the issue in regards to affordable housing but is overall a positive and natural step forward.

What, if any, is the correlation between the local economy and choice of what college to attend?

At the University of Tennessee, there is much more happening behind the scenes. There is increased enrollment, but also an influx in out-of-state students.

Gilpatric noted that the University has had a long-term goal of becoming a Top 25 public university. With the Top 25 goal alongside other factors, including athletics and the choices affected by the COVID-19 pandemic, UT has hit enrollment milestones and received national attention for its programs and innovations.

In fall 2022, for example, the Haslam School of Business attracted a record number of students and a record number for students out of state. There is a multi-faceted push to continue UT’s increase in national prestige and is something that is being worked toward on a college level as well as a state legislative level, according to Gilpatric.

Essentially, the economics of the reconstruction of the Strip is one that is beneficial to Knoxville as a whole. For students, there may not be an immediate dramatic difference, but the addition of thousands of new apartments should relieve some of the current pressure in regards to housing.

Coming next, part 2: Hancen Sale, Government Affairs and Policy Director at East Tennessee REALTORS, discusses how UT students affect the Knoxville housing market

-Written by University of Tennessee Baker Center Fellow Lillian Marcum, who interned this spring in the City's Communications Department

Posted by evreeland On 04 August, 2023 at 11:16 AM