Commercial real estate reports rate local economy’s performance
Last week’s National Association of REALTORS® (NAR) Commercial Real Estate Market Conditions Index affirmed local reports and added some high-level context about our market. The first bit of news wasn’t exactly what we wanted to hear.
Both local metro areas’ commercial real estate markets were not as strong as the overall U.S. market index ranking. But there was a silver lining. According to the analysis, the overall economic conditions of the Johnson City and Kingsport-Bristol metro areas were stronger than national conditions, even though they didn’t measure up to the index’s middle-ground benchmark.
On the surface, that sounds like dueling assumptions. But it’s not. The index is calculated using 25 variables that include things like job growth, unemployment rates, and wage growth. It also considers demographic conditions like new domestic migration and population growth. The icing on the cake is commercial market conditions for multifamily, office, industrial, and retail property sections with their vacancy rates, absorption rates, rent growth, cap rates, etc.
Here are the high points on how our region’s two major metro areas were doing during the first three months of this year compared to the first quarter of last year.
JOHNSON CITY MSA
Year-over-year nonfarm employment – up 2.8%
Average weekly wage – $707, up 14.2%
GDP growth – down 1.1%.
Population growth – up 1.6%
Year-over-year nonfarm employment – up 3.3%
Average weekly wage – $761, up 10.1%
GDP growth – down 4%.
Population growth – down 0.1%
NAR’s report also includes detailed snapshots of the performance of five primary commercial real estate sectors.
APARTMENT PROPERTY MARKET
Since the housing rental markets are so closely related to the current supply/demand dynamics of the overall housing market core information about the multi-family sector is critical to market watchers. NAR’s Q1 report established that there are about 65,000 apartment units in the region. An Attom Data Solutions report on single-family and condo investment properties totaled 61,289. Combined, they account for a little more than 40% of the region’s total number of housing units.
The Johnson City metro area’s apartment market is about the same as the national market, while Kingsport-Bristol’s market is not as strong.
The multifamily inventory in the Johnson City metro area was 6,441 apartments, up from 6,117 last year. Kingsport-Bristol’s inventory was 5,404 apartments, up from 5,309.
Johnson City’s apartment community had a vacancy rate of 2.2%. It was 3% in Kingsport-Bristol.
Rents were up 4.9% in Johnson City and 8.9% higher in Kingsport-Bristol.
The effective rent per apartment was $872 a month in Kingsport-Bristol and $837 a month in Johnson City
Watch NETAR’s website and its Facebook page for more detailed looks at the other four commercial property sectors. To conserve space, here’s a capsule of what you’ll find.
OFFICE PROPERTY MARKET
Neither the Johnson City nor Kingsport-Bristol markets are as strong as the national market.
INDUSTRIAL PROPERTY MARKET
The Kingsport-Bristol market is stronger than the national market, while the Johnson City metro market is about the same as the national market.
RETAIL PROPERTY MARKET
The retail market in both local metro areas is not as strong as the national market performance.
HOTEL/LODGING PROPERTY MARKET
The Kingsport-Bristol market is about the same as the national market, while the Johnson City market is weaker than the national benchmark.
This is the type of information that comes hand-in-hand with commercial market reports. It’s the pulse of the local economy because that’s what commercial real estate is about. It’s an integral tool in every commercial REALTOR’S tool kit and is reported regularly by the Northeast Tennessee Association of REALTORS® (NETAR) in its role as the voice for real estate in NE Tennessee and SW Va.
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