March sees strong growth for Tri-Cities commercial real estate

Tri-Cities commercial real estate saw its best month in over a year in March. Transactions were up 71.9 percent in the wake of a dramatic increase in office sector activity.  And new listings were up nine percent over last year.

The first quarter was equally strong, with a 38.5 percent transaction increase.

Cassie Petzoldt, Northeast Tennessee Association of Realtors (NETAR) Commercial Committee chair, said momentum has been building since the fourth quarter of last year. It finally took off last month. Commercial real estate is typically more aligned with the overall economy and the business cycle, and we’re seeing positive movement for both this spring.”

Commercial vacant land sales were the lifeblood of commercial transactions last year. This year’s transactions are more than double what they were the first three months of last year.

Industrial properties also continue to be stable. Last year there were 34 transactions. During the first three months of this year, there were 11 transactions compared to nine last year. The strongest headwind is lack of inventory.

With the economy beginning to open, activity in both the shopping center and retail-commercial sectors is coming to life. This year, retail-commercial transactions are up more than 40 percent, and shopping center transactions are up almost 40 percent.

Commercial markets and the overall economy turned down in 2020 due to an external shock – not an internal weakness. The effects of that shock are beginning to wear off, releasing the pent-up demand that built up last year.

New commercial real estate construction is also expanding. There were 563 commercial permits pulled last year, according to The Market Edge’s Commercial Real Estate trends report. That 8.5 percent increase over 2019 was the best year since 2016. Construction value for last year’s permits was $199.1 million.  

Cassie Petzoldt, Northeast Tennessee Association of Realtors (NETAR) Commercial Committee chair, said momentum has been building since the fourth quarter of last year. It finally took off last month. Commercial real estate is typically more aligned with the overall economy and the business cycle, and we’re seeing positive movement for both this spring.”

Commercial vacant land sales were the lifeblood of commercial transactions last year. This year’s transactions are more than double what they were the first three months of last year.

Industrial properties also continue to be stable. Last year there were 34 transactions. During the first three months of this year, there were 11 transactions compared to nine last year. The strongest headwind is lack of inventory.

With the economy beginning to open, activity in both the shopping center and retail-commercial sectors is coming to life. This year, retail-commercial transactions are up more than 40 percent, and shopping center transactions are up almost 40 percent.

Commercial markets and the overall economy turned down in 2020 due to an external shock – not an internal weakness. The effects of that shock are beginning to wear off, releasing the pent-up demand that built up last year.

New commercial real estate construction is also expanding. There were 563 commercial permits pulled last year, according to The Market Edge’s Commercial Real Estate trends report. That 8.5 percent increase over 2019 was the best year since 2016. Construction value for last year’s permits was $199.1 million.