Local commercial real estate market heads for banner year
Commercial real estate scored another strong month in July with the Retail-Commercial and Office Sector accounting for almost half of all transactions.
Transactions were up 96.6 percent from July last year, according to the Northeast Tennessee Association of Realtors (NETAR) Commercial Sales Report.
“There were more transactions last month than July last year or July 2019. So far this year, we’ve logged 311 transactions from the two primary local commercial listing services. That’s only 58 closed deals from the total for all last year.” Web traffic to our listings is up. So are inquiries from local and out-of-state investors. They are shaking off the residue from the recession. Even though there are still concerns about the economy, they’re looking past the worst access to labor since the 1970s and inflation for opportunities in the post-pandemic economy, she added.
There were 57 transactions from the local listing services in July. So far this year, there have been 60 sales and leases of office space. Most were in the Johnson City metro area, which is starting to show signs of absorption of that type of inventory. This time last year, there were 83 office listings. Last month there were 37.
The Kingsport-Bristol metro area has seen an increase in office sales and leases but not as much absorption. There were 53 office listings in July compared to 81 July last year.
A similar situation exists in the Retail-Commercial Sector. It saw eight transactions last month. So far this year, there have been 50. Much of that is the reopening of the hospitality, retail and foodservice businesses.
The Johnson City metro area has 34 listings compared to 50 last year. Kingsport-Bristol had 39 listings compared to 40 last year.
Like the rest of the U.S., the Tri-Cities’s commercial inventory is over retailed when compared to the rest of the industrialized world. Some of that is a remnant of overbuilding in the past. Another reason is the continuing trend toward online retail replacing some of the demand for bricks and mortar space. That’s why some investors are beginning to look at repurposing vacant offices and retail space to plug some of the gaps in local housing markets.
Industrial is the only local sector where inventory is tight. There were five deals in that sector last month and 29 so far this year. During the first seven months of last year, there were 20 industrial transactions.
Another sector seeing a lot of activity is multi-family. Many of the large transactions don’t show up on the local commercial listing services. The properties are bought and sold by out-of-state individuals and investment firms. Currently, several large complexes are being planned some have changed hands.
There were 87 new commercial listings last month, up from 52 last year. The total for new listing so far this year is 508. During the first seven months of last year there were 361.
There were 835 listing on the two local commercial services during July, down 5.2 percent from last year.