Growth gives local commercial real estate new vibe
Growth is giving much of NE Tenn. and SW Va. a new look. While it’s more defined in some areas than others, there’s no mistaking the change.
Some are almost giddy with a potential Renaissance in the Twin Cities via the Hard Rock Casino and the potential for return of passenger rail service. It has spurred residential growth that has lagged the other cities, but is now speeding up.
Kingsport is also experiencing a wave of residential and commercial development. And requests for annexations and infill projects are increasing in Johnson City. Greeneville is also riding the development wave, as are the smaller communities that are harvesting some of the overflow benefits of population and business growth in larger markets.
The one thing the region hasn’t capitalized on is the power of regional marketing, but that’s another story.
Commercial realtors across the region say they are busy handling inquiries, and market studies from both locals and outside investors even though the extent of that activity isn’t reflected in short-term transaction tracking.
The FED’s current Beige Book reports “the Southeast economy grew slowly from mid-August through September as labor markets loosened and price pressures mostly stabilized. Several top economists are busy revising their outlooks due the the third quarter economy growth spurt. Locally, and across the southeast, there’s increased investment in new developments and revitalization projects. However, market volatility remains due to geopolitical tensions and economic uncertainty.”
September’s Northeast Tennessee Association of Realtors (NETAR) Commercial Sales report shows the year-to-date sales and lease transactions are running 41 percent below where they were last year. The three-month trend shows a slow improvement as the market enters the fourth quarter.
Multi-family continues to lead other sections even with the transaction softening this year. Since the first of the year there have been 67 transactions, down from 113 during the first nine months of last year.
Higher interest rates and the resetting of commercial loans dampened the multi-sector expansion rate during the first half of the year, but there are signs of improvement from both developers and investors in the Kingsport and Johnson City areas.
Even though retail transactions are down, strip mall activity continues its march toward low vacancies and high demand. So far this year 44 transactions have been completed, down from 64 last year.
The office sector also continues its role as the third highest sector from completed transactions.
Jerry Petzoldt, chair of NETAR’s Commercial Committee, said he expects transactions will return to pre-pandemic – or better – levels during the first half of next year barring no escalations of geopolitical conditions that would dampen the economy.
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 1,800+ 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