Local commercial real estate gains momentum
Commercial real estate (CRE) gained some local momentum in February. Transactions were up from January. Year-to-date transactions were better than the first two months of last year. And listing traffic is also higher. The only lagging indicator is inventory.
The local commercial market is beginning to respond to anticipation of a consumer spending splurge and an improved business cycle as the retail and service sectors open up, said Cassie Petzoldt, chair of the Northeast Tennessee Association of Realtors (NETAR) Commercial Committee. Things are improving, but commercial real estate is more dependent on the business cycle, which is picking up, than residential real estate, which is booming.
Commercial vacant land listings were the lifeblood of February’s local listings. They were 20 more than last month but 52 fewer than the first two months of last year. That’s consistent with the increased sales of commercial and other land sales during the past 12 months.
There were 37 commercial transactions last month, six more than last year, according to NETAR’s Commercial Sales Report. Listings There were 875 listings, down 135 from January and 206 fewer than February last year.
Listing web traffic increased 25.5% from January.
Nationwide the industrial sector continues to be the lifeblood of the commercial market. Locally, industrial listings were down from the first two months of last year. That’s not unusual since industrial transactions were among the leading group last year, and there hasn’t been a rush to upgrade inventory.
Listing for retail commercial and shopping center increased over the first two months of last year. So have investor inquiries. Some of that can be attributed to the trend toward lower rents for retail properties. The National Association of Realtors (NAR) forecast calls for a 2.5 percent decrease in retail rents this year.
The 2020 year-end report on commercial building permits is scheduled for release next month. It’s projected that it will increase the number of new permits from the 2019 total.