Tri-Cities commercial real estate continues slow recovery
The Tri-Cities’ commercial real estate (CRE) market continued eking out a slow recovery in January despite continued economic challenges. Transactions and new listings were up from last year, and the Industrial, Office and Vacant Land sectors continue to be the market’s lifeblood.
There were no transactions for Shopping Center properties in January and only two in the Retail-Commercial sector. Both lag the Jan. 2019 sector performance.
There were 26 transactions last month, three more than in January last year, according to the Northeast Tennessee Association of Realtors (NETAR) Commercial Sales Report. There were 1010 listings, up 206 from December and 34 more than last year. Listing web traffic increased 19.4% from December.
Economic conditions have a heavy impact on commercial transactions, and the labor market is at the top of the watch list. The overall Tri-Cities job market is still weak. Job creation continued its three-month slowing and moved into negative territory in the most recent report. Although employers have reclaimed about 10,000 of the 18,500 jobs lost during the April crash, there are almost 10,000 fewer jobs than this time last year. Since April, most of the gains have been in the Leisure and Hospitality sectors, which suffered the hardest hit when the pandemic struck.
The latest Bureau of Labor Statistics (BLS) report also shows the unemployment rate has increased to 6%, and employment is down by almost 4,000. At the same time, the Jobs4Tn website lists 3,800 jobs being advertised in the Kingsport-Bristol metro area and another 2,498 being advertised in the Johnson City metro area.
Investor inquiries, more traffic to web listings, and plans for new construction add some luster to the otherwise dire commercial outlook.
- Commercial Realtors report they are getting more inquiries from California and New York investors – especially in the Kingsport market.
– The Bristol market continues moving ahead on the momentum provided by approval for a casino.
Johnson City plans to start the West Walnut Street project this spring, and work at Exit 17 continues to fuel interest in Gray’s eastward commercial and residential real estate expansion. When the Exit 17 interchange is completion, the area will be more attractive for retailers to move in. There are two retail projects – the Boones Creek Development project and the Promeade at Boones Creek – planned.
- There has also been an uptick in investor interest in rental housing – both short and long-term.
The 2020 year-end report on commercial permits is scheduled for release next month. It’s projected that it will show an increase in the number of new permits from the 2019 total.