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Tennessee Department of Children’s Services 10 Year Lease - 6.5% Cap + Value Add

$7,500,000

2600 Western Ave, Knoxville, TN 37921

Active
Last Updated: 08/01/2025

55,000 sqft

Building Size

9.11 acres

Lot Area

Details:
Building Size:    55,000 sqft
Lot Area:    9.11 acres
Occupancy:    100%
Class:    C
Units:    1
Year Built:    2009
Floors:    1
Parking Spots:    270
Highlights:
  • 10-Year lease through November 30, 2035
  • Leased by the State of Tennessee
  • AAA+ S&P Global Credit Rating
  • Tenant pays utilities and janitorial
  • Built for DCS in 2009
  • HVAC replaced in 2024
  • 270 paved parking spaces
  • Normal state appropriations clause
  • Includes an additional 3.38-acre site
  • ±6,478 SF for additional income
Description:

Opportunity to acquire a facility on ±9.11 acres with 270 parking spaces designed and built in 2009 for the Tennessee Department of Children’s Services (DCS). DCS has a lease through November 30th of this year with a new 10-year lease beginning as soon as current construction is completed, which should be by December.

The property includes two significant value-add components. The sale includes an additional ±3.38 acre site to build-up to a 20,000 building. Additionally, there will be ±6,478 SF to lease for added income. Let’s consider values for each component. Considering conservative pricing of $150,000 per acre for the site and a low $10.00/SF for leasable space at a 10% cap rate. The separate values are $6,352,200 for a ten-year state lease, which is an awesome cap rate of 7.7%. A 3.38 acre site at $500,000 and $100/SF for the leasable space to generate a 10% cap rate.

The property is perfectly located for DCS in Knoxville, TN, the second-fastest-growing city in the state of Tennessee. The sites are close to Interstates I-40 and I-640 in West Knoxville.

This property is located in Knoxville, Tennessee.

Map:
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