News
November 3, 2019

Report shows how much real estate adds to the local economy

By KAREN RANDOLPH    


KAREN RANDOLPH
2019 NETAR President

All too often the public perception of real estate is one-dimensional. The residential side of the business gets most of the attention. But there’s more to the real estate story. Commercial real estate is critical to the local economy even if it’s not in the spotlight.

The Northeast Tennessee Association of Realtors® commercial real estate mid-year report offers some facts, and numbers, that often go unnoticed by the public. For instance, During the first six months of this year there were 274 completed commercial sales. Those transactions – as measured by title transfers – were worth $103.3 million. That was a little over $50 million less the first half of last year even though there were more transactions this year.  The biggest commercial sales so far this year was the $20 million sale of the Monarch Apartments in Johnson City and the sales of the Bristol Va. Court Yards by Marriott for $13.7 million.

Part of the data for NETAR’s mid-year commercial report comes from third-party sources. For example, the commercial sales numbers came from the Appalachian Highlands Dashboard for Real Estate Analytics, a new enterprise by Don Fenley, supported by TechPoint’s Austin Ramsey, TCI Group’s Nina Heffner, and underwritten by Jerry Petzoldt, TCI Lifestyle Investments. 

An internal source for commercial lease transactions was the NETAR Commercial Multiple Listing Service (CMLS). It shows leases transactions were a 33.3 percent improvement over last year. It was the best half-year showing since 2015. NETAR’s CMLS transactions do not include lease data from other commercial listing services.

And then there were the new commercial building permits from The Market Edge in Knoxville. That report listed a total of 267 new permits during the first half of the year compared to 213 last year. Sullivan and Washington counties – the region’s largest markets – accounted for the lion’s share of new permits, while Greene Co. Tenn. and Washington Co. Va. saw noteworthy increases in the number of permits. The Washington County market saw the highest construction value gain from mid last year - up $22.3 million – while the Sullivan County increase was $8.9 million. Together new permits for those two counties totaled $83.5 million.

The full mid-year report, which includes market assessments from a panel of NETAR members who are commercial practitioners can be found at on the NETAR website in the Commercial Real Estate category that’s linked to the top of the page. https://netar.us/2019-mid-year-cre-data-shows-market-increases-realtors-have-some-reservation-about-outlook

Observation from commercial practitioners on the state of the market at mid-year was mixed. Since then activity has picked up. But there's still a surplus of some types of commercial property and locals are maneuvering to make the most from an economy that is bifurcated in many ways. Like the national economy - much of what’s happening locally is squarely in the court of the consumer. Nationally, manufacturing is in recession, and analysts are anxiously watching the economic conditions in Europe and China. The local exception is the existing residential housing market. It continues churning out record monthly sales and home price increases.

The economic big picture for this year is still several months off, but a look at last year’s total sales volume for residential, commercial and new home sales shows just how much the real estate industry contributes to the local economy. That combined sales volume was $1.9 billion. When you add the multipliers calculated by the formulas from the research division of the National Association of Realtors® last’s year total economic impact was about $2.4 billion.

NETAR is the voice for real estate in Northeast Tennessee. It’s the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,200 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, monthly Trends Reports, and the regional market analytics can be found on the NETAR websites at https://netar.us/voice-real-estate-northeast-tennessee .

 

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