Local commercial real estate recovery gains momentum
The COVID-19 pandemic ravaged some commercial real estate sectors, but overall the market has bounced back. Investors have made a record number of local leases and sales so far this year.
“There were 43 transactions finalized in October. That was a down a little from September, but the 463 total for the first 10 months of this year is a record,” according to Cassie Petzoldt, Chair of the Northeast Tennessee Association of Realtors (NETAR) Commercial Committee.” Year-to-date transactions are a 61% improvement from the first 10 months of last year.
“Local investors are more active, and increasing numbers of out-of-area investors are shopping the NE Tenn. – SW Va. marketplace.” Sales and leases are up in all sectors as the market closes in on a new annual benchmark. Listings and web traffic are also up, she added.
The hottest sectors are office, retail-commercial, industrial, vacant land, and shopping centers.
Performance of the office, retail-commercial, and shopping center sectors contrast third-quarter reports on the national level. According to the Wall Street Journal, office buildings and retail are not in the spotlight as they historically have been. Instead, industrial properties and e-commerce distribution centers are among the biggest drivers of the U.S. commercial real estate marketplace.
Industrial transactions have been the third-best local performers in the local market so far. Local agents say the number would be higher if there were more inventory. The shortage has basically put the local last-mile delivery market on the sidelines, they contend.
Local multi-family transactions are muted because NETAR’s report is based on local commercial listing services. Many of the larger projects are listed on national services.
Michael Green, a NETAR board director, and commercial Realtor at Century 21 Legacy said investors are fleeing the primary and secondary markets on a quest for higher investment returns in the tertiary markets like the Tri-Cities. Some investors offer a little different reason. Derek Smith, a spokesperson for Ivy Courts LLC, said, “Sure, you can find other areas with the potential for bigger profit margins,” but that’s not paramount for us. “We found a strong sense of community, and we want to join with the communities where we invest.” The firm recently invested in Ivy Court in Johnson City and is “looking at several other properties.”
Transactions by sector so far this year, compared to last year, are:
Office – 80, up 17.
Retail-Commercial – 71, up 40.
Industrial – 45, up 15.
Vacant Land – 38, up 16.
Shopping Center – 37, up 12.
Multi-Family – 4, up 2.
Special Purpose – 2, up 2.
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