Commercial real estate continues above pre-pandemic performance
Commercial real estate (CRE) transactions hit a slump in September but it didn’t dent the local market’s momentum. So far this year, completed sales and leases are up 63.4%. The trend is at a four-year high.
“The local commercial market recovery continues bubbling up,” said Northeast Tennessee Association of Realtors (NETAR) Commercial Committee Chair Cassie Petzoldt in the association’s September report. “We’ve seen increased activity from solid local and out-of-area players during the past three to six months. The local economy is experiencing a somewhat uneven recovery, but demand for commercial real estate continues building. The region’s high transmission of the delta variant and labor shortage has held back a couple of sectors, so the overall labor market is underperforming expectations and demand.”
The office and retail-commercial sectors continue to lead sales and leases. Industrial activity slowed to its second-lowest level last month primarily due to the lack of inventory.
So far this year, there have been 420 commercial transactions in the Tri-Cities region. During the first nine months of last year, when the commercial market was struggling with the effects of the pandemic, there were 257.
The year-to-date sales and lease totals for the top-performing sections are:
· Office – 74
· Retail Commercial – 71
· Industrial – 43
· Vacant Land – 33
· Shopping Center – 24
According to the National Association of Realtors Quarterly Commercial Market Survey, secondary markets continue experiencing increased office occupancy due to the in-migration. The local market is too small to be in the secondary markets class that has been one of the local drivers as it becomes clear that remote work is here to stay.
Although there has been an increase in multi-family activity, most of the listings and deals for that sector are not part of the two local commercial databases. There are several listings on national databases and a recently closed deal on a 60-unit motel conversion in Bristol, VA. Most of the multi-family activity continues to be in the new development portion of the sector.
Active inventory in the two local commercial databases was 805 listings. That’s down 6 percent for September last year.
There were 74 new listings last month, up 111.4 percent from September last year. The Industrial, Office, and Vacant Land sectors were the only sectors where new listings were up from the August total.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us