Three years ago as Cam Doody and Matt Patterson were building Brickyard, their business incubator on Chattanooga’s Southside, the investment pair heard about an artificial intelligence (AI) startup business known as Brev.dev and were quickly won over by the company founders.
“We believed in the founding team from day one,” recalls Doody, who years earlier had helped build Bellhop, a Chattanooga-based moving company, to become a success nationwide.
Brickyard made three rounds of investments in Brev.dev and by last summer, the software startup had caught the attention of the most valuable company in the world, Nvidia, which purchased Brev.dev in July of 2024 to help build its growing AI business.
Terms of the sale were not disclosed and Brev.dev returned to its Silicon Valley roots with the recent acquisition. But Doody says the lucrative sale was a major validation of the Brickyard model of investing and building high-growth companies, many of whom may keep at least some of their operations in Chattanooga.
“We’re really talking about changing the face of the city with the number of businesses who I think will ultimately chose to build their businesses in Chattanooga,” Doody says. “Over the next decade or so, we could have 150 high-growth companies with ties to Chattanooga and the potential to collectively raise billions of dollars of venture capital.”
With its high-speed internet service, central location, lower cost of living and natural attractions, Chattanooga is appealing to both businesses and workers, Doody says. That should help Chattanooga continue to outperform the U.S. economy in 2025, barring an economic downturn in the year ahead.
Photography by Olivia Ross / Cam Doody at BrickyardAdam Myers, vice president of economic development for the Chattanooga Area Chamber of Commerce, says more businesses are looking to locate or expand in Chattanooga next year.
“We have several projects nearing the final stages of their site selection and we anticipate starting off 2025 with more exciting announcements,” Myers says.
But the Chamber leader acknowledges lingering uncertainties surrounding the change in the White House, as well as the future of trade policies and investments in electric vehicles and other advanced energy projects emerging in East Tennessee.
“All these factors will have an impact on both the local and national economy, but it is too early to tell the extent,” Myers says.
Howard Wall, director of the Center for Regional Economic Research at the University of Tennessee at Chattanooga, predicts Chattanooga’s economy will continue to grow in 2025 — unless a national recession unexpectedly slows the U.S. economy.
After reaching an all-time low of 2.5% last April, unemployment in the Chattanooga metropolitan area has risen slightly but remains well below the national average. It is also under the 4% threshold that many economists consider full employment, where nearly everyone seeking a job can find one.
Although Wall downgraded an earlier forecast for employment growth, the UTC economist still predicts metropolitan Chattanooga will add 6,700 jobs in the next year. That would be slower than the post-pandemic boom, but would still rank among Chattanooga’s top 10 years for job growth.
Chattanooga’s manufacturing-based economy trailed much of the country’s economic growth for half a century until about a decade ago, when the region began outpacing growth in most cities. Emerging from the Covid pandemic with stronger growth in both manufacturing and leisure and hospitality spending, Chattanooga has outperformed the U.S. economy in recent years and stands to continue to benefit from the Mid-South’s growth and diverse economy.
“The success of Chattanooga’s economy over the past decade has been fairly broad,” says Wall, who bills himself as Chattanooga’s economist. “The Chattanooga economy is not incredibly tied to the national economy, except if there is a downturn. Chattanooga is more manufacturing-based and recessions historically have been more devastating for Chattanooga.”
Leisure and hospitality has been growing consistently in recent years in Chattanooga with visitors spending more than $1.7 billion a year at Chattanooga hotels, restaurants and local attractions. Manufacturing employment has flattened in the past couple of years, “but with increased productivity we continue to see an increase in manufacturing output,” Wall says.
Wall doesn’t expect to see a manufacturing employment boom in 2025 like the one seen after the pandemic, but he does predict continued growth in the coming year. But trade policies could affect the sector.
“Mass deportations and tariffs could hurt the economy next year,” he says.
With major foreign-based companies in the Chattanooga area such as Volkswagen, Komatsu, BASF, Wacker Chemie, GE Roper, Q Cells, Gestamp and others, widespread tariffs could hurt international trade and many of Chattanooga’s biggest employers if they are implemented, he suggests.
But many Chattanooga businesses could also benefit from the new Trump administration efforts to adopt a more pro-business and anti-regulation approach to governing.
David Parker, CEO of Covenant Logistics, was one of the most bullish of the trucking company CEOs in 2024 and he foresees a better years ahead. Parker says most of those in the trucking industry “are thrilled” with the election outcome.
“Besides ending the doubt and uncertainty, the industry sees a lot better policies than we saw from the Biden administration,” Parker said during the F-3 Freight Festival after the November election. “I know that the trucking industry is going to be in much better shape in terms of regulations. and I think on the industrial side, it is going to be better.”
Parker says the inflationary impacts from higher tariffs would be offset by the likelihood of cheaper gasoline and natural gas prices if more fossil fuel production is opened as Trump has promised with his pledge to “drill, baby, drill.”
Staff file photo by C.B. Schmelter / Matt Phillips is managing partner for Rise Partners.“There is a lot of deflation in fuel and oil because it affects everything we make and ship,” Parker says.
Matt Phillips, managing partner of the commercial real estate firm Rise Partners, predicts continued growth in retail, hospitality, and industrial projects across Chattanooga and other Mid-South markets. These areas are attracting an increasing number of people and businesses.
With the Federal Reserve Board cutting interest rates in late 2024 and the election outcome now known, “it’s almost like somebody opened the floodgates” with more businesses planning new investments, Phillips says.
“I think retail in 2025 is going to continue to be very strong and the industrial sector is going to be improved from what we’ve seen in either 2023 or 2024,” Phillips predicts. “Unlike many markets, Chattanooga doesn’t have a problem with oversupply and we continue to grow faster than the national average.”
Rise Partners, a Chattanooga-based development firm focusing on mid-sized and smaller markets across 11 Sunbelt states, launched its first project in 2018. Since then, it has completed $425 million worth of developments in retail, multi-family housing and industrial real estate. The company is nearing completion of the first of four 190,000-square-foot industrial buildings planned for North River Commerce Park in Hixson.
“We’re in the middle of many growing markets in the South and Chattanooga is poised to do very well in the year ahead,” Phillips says.
WHAT TO WATCH FOR IN 2025
1. Reshaping Downtown
Downtown Chattanooga is poised for significant transformation in 2025. The General Services Administration plans to select a site for a new $218 million federal courthouse early in the year, while major developments are expected to reshape the Westside as The Bend takes shape, a new high school is being planned in the Golden Gateway, and Chattanooga’s oldest public housing project is upgraded at College Hill Courts. The plans “will transform the community for future generations,” says Betsy McCright, executive director of the Chattanooga Housing Authority.
Collectively, more than $2 billion in new projects aim to add housing, retail and entertainment projects downtown, even as some existing anchors relocate or reduce their footprint. The River City Co. will continue to explore options for the future of Hawk Hill, which has been anchored by the AT&T Stadium since 2000. However, the stadium, home to the Chattanooga Lookouts since 2000, will be demolished after the team relocates to the Southside in 2026.
Additionally, the Tennessee Valley Authority is considering ways to reduce or replace its campus — Chattanooga’s largest downtown office complex — after downsizing and shifting to more work-from-home jobs.
2. Energy Shift
The Trump administration has pledged to help lower gas prices by cutting business taxes, opening up public lands and deregulating energy production, which could help Chattanooga’s trucking and logistics industry. But East Tennessee is also getting an energy boost beyond fossil fuels with billions of dollars of investments planned for new nuclear power, solar energy and battery equipment manufacturing.
Aided by federal incentives, Novonix is looking at a $1 billion plant in Chattanooga to make synthetic graphite for battery manufacturers in what would be the biggest new manufacturing investment in Hamilton County in the past six years. In Dalton and Calhoun, Georgia, Q Cells is investing $2.5 billion to build the biggest American solar panel production plants, and planned investments in Oak Ridge from Kairos Power, Orano USA, X-energy’s TRIOSO-X and Type One Energy could bring more than $10 billion of investment and thousands of new jobs developing and building advanced nuclear power plants.
A study by the Baker School of Public Policy at the University of Tennessee at Knoxville says advanced energy accounts for 32,144 jobs in metropolitan Chattanooga, or one of every eight jobs, and such employment should grow faster than the overall economy in future years. But such growth and investments also could be undermined if Congress rolls back federal investments in advanced energy or the market for electric vehicles, nuclear power and solar energy weakens.
Contributed photo / A $54 million Embassy Suites hotel at Broad and 4h Streets in downtown Chattanooga is scheduled to open later in 2025.3. More Room at the Inn
After adding 10 more hotels in the Chattanooga area in 2024, a half dozen more hotels are planned or are being built in downtown Chattanooga, including a new $54 million Embassy Suites taking shape at Broad and 4th Streets, and a 148-room Hilton hotel planned in the former Chattanooga Bank building.
Hamilton County’s $1.7 billion-a-year tourism industry continues to grow, and the planned addition of more than 800 hotel rooms downtown will add to the city’s growing lodging capacity. Meanwhile, city planners are pursuing options for a re-imagined Broad Street downtown and a possible expansion of Chattanooga’s Convention and Trade Center, along with the addition of another hotel attached to the convention complex. Hicks Armor, chairman of the Carter Street Corp., which owns and operates the trade center, says planned downtown improvements “are going to put a six-lane highway into the trade center,” to help propel its future growth.
4. Hospital Reshuffling
Moccasin Bend Mental Hospital, the region’s largest psychiatric facility, is searching for a new site to build a $260 million mental health facility after an archaeological study completed in September, which uncovered ancient human remains buried at the hospital’s current location. The study was the first archaeological review of the site since the state facility was established in 1961.
Several other Chattanooga hospitals are also expanding their suburban locations. CHI Memorial is replacing the 71-year-old Hutcheson Medical Center in Fort Oglethorpe with a 64-bed hospital in Ringgold, scheduled to open in December 2025. CHI is also partnering with Life Point to build $80 million rehabilitation hospital in Ooltewah.
Erlanger Health System purchased the Hamilton County health department building on 3rd Street to expand downtown. HCA has opened emergency room facilities in the past year in both East Ridge and Soddy-Daisy, and HCA and Erlanger are joining together to develop plans for a medical complex in a former U.S. Xpress office building in East Brainerd.
Contributed photo / A rendering shows plans for CHI Memorial’s new hospital epected to open by the end of 2025 in Ringgold, Georgia.5. Labor Gains or Pains
After winning the biggest labor union organizing effort in Chattanooga last spring and gaining majority support to represent workers in Spring Hill, Tennessee, the United Auto Workers (UAW) union hopes to negotiate and ratify contracts in 2025 with Volkswagen in Chattanooga and Ultium Cells, a joint venture of General Motors and LG Energy Solution, in Spring Hill.
“The UAW members at Ultium and VW are proving that the new jobs of the South will be union jobs,” says Tim Smith, director of UAW’s Region 8.
But UAW is facing both market and political resistance in Tennessee to matching contract terms the UAW has with the Big Three automakers in Detroit. Tennessee Gov. Bill Lee joined with five other GOP governors in the South to criticize the UAW and warn that unionization will “certainly put our states’ jobs in jeopardy.”
UAW’s negotiations with Volkswagen in 2025 coincide with VW’s plans to close some plants in Germany for the first time. Despite this, Chattanooga’s economy remains strong, with historically low unemployment and continued job growth.
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