June’s commercial real estate transactions were down from May’s total while posting strong (up 50%) year-over-year and six-month trend gains. The local mid-year growth rate is 13.4% better than the first half of last year. There were 42 completed sales and leases in June, down from 69 in May. 

“Despite the potential for continued interest rate hikes, commercial real estate in the region monitored by the Northeast Tennessee Association of Realtors (NETAR) remains positive heading into the last half of the year,” according to NETAR President Rick Chantry. “There were only two year-to-date commercial sectors with lower completed deals than last year, and one – industrial – is more a lack-of-inventory situation than dwindling demand. Shopping center deals were the other down sector, and it was only by one transaction.” 

Although local labor market data for June wasn’t available when this report was written, it has continued improving. May was the region’s best month for job creation despite a persistent labor shortage choking growth in some lower-paying service sectors like health care services, accommodations, food services, and retail. Employers added an adjusted average of 42 jobs a month for the year’s first five months.  

“The strong labor market has helped power consumer spending,” Chantry added. At the same time, slowing economic conditions will likely start weighing more on some sectors during the last half of the year.” 

Office transactions accounted for almost half of the first half of the year-to-date sales and leases. Multi-family also made a six-month solid showing as limited inventory of homes for sale and higher mortgage rates helped fuel an increase in rental activity despite rent increases that have equaled the wage-housing cost growth rate imbalance. 

Here’s how the CMLS transactions stack up for the first half of this year compared to last year. 

Office – 55, up 11 

Retail-commercial – 46, up 4 

Vacant land – 25, up 1 

Industrial – 22, down 2 

Shopping center – 16, down 1 

Multi-family 11, up 9 

Combined CMLS and Flex total – 288, up 34. 

Commercial inventory is down 20.3% from last year, and new listings are down 2.9%. 

At the mid-year point, all by one sector (multi-family) has fewer listings than the first half of last year.  

Listing sectors with the most absorption was vacant land, followed by retail-commercial then office.