Strong fundamentals move local commercial market forward 

Don Fenley 

The local commercial real estate (CRE) market continues moving forward despite higher interest rates and inflation. According to the Northeast Tennessee Association of Realtors (NETAR) and the National Association of Realtors (NAR), it’s being driven by strong fundamentals in the most commercial sectors and land sales.  

NAR’s Commercial Real Estate Metro Market Report says neither of the region’s two metro areas’ commercial markets is as strong as the overall U.S. Commercial Real Estate Condition Index; however, both areas’ overall economic conditions are stronger than they are nationally.  

Here’s the broad assessment of the local metro areas’ commercial sectors according to NAR:  


  • The office property market is about the same as it is nationally 
  • The industrial property market is about the same as it is nationally 
  • The retail property market is not as strong as it is nationally 
  • The hotel/lodgings property market is not as strong as it is 
  • Average weekly wage $707 
  • Wage growth, year-over-year, 14.2% 
  • GDP growth down 1.1% 


  • The office property market is not as strong as it is nationally 
  • The industrial property market is stronger than it is nationally 
  • The retail property market is not as strong as it is nationally 
  • The hotel/lodging property market is about the same as it is nationally 
  • Average weekly wage $761 
  • Wage growth, year-over-year 10.1% 
  • GDP growth down 4% 

April transactions were up almost 21%, according to NETAR’s April Commercial Market Report. “Activity from out-of-area investors has increased and is now a primary market driver here in NE Tenn. and SW Va.,” said Cassie Petzoldt, chair of NETAR’s commercial committee. “Most of the out-of-state traffic for listings on NETAR’s Commercial Multiple Listing Service (CMLS) website was from Virginia. Georgia was a distant second place followed by South Carolina, California, and Ohio.” There were 661 active commercial listings at month’s end, down 21.9% from April last year.  

Retail-Commercial and Shopping center sales and leases were last month’s best performing CMLS sectors.  

Here’s how CMLS transactions look for the first four months of the year compared to last year:  

  • Retail Commercial – 31, up 2 
  • Office – 30, down 4 
  • Vacant Land – 16, up 1 
  • Industrial – 15, down 1 
  • Shopping Center – 12, up 1 

Flex commercial listings are not segmented. 

So far this year, there have been 177 sales and leases in the region monitored by NETAR  

Strong sales and leases have reduced the region’s inventory by 21.9% from April last year. The CMLS inventory is down 25%, and the Flex commercial inventory is down 16.7%.  

There were 69 new listings in April. Since new listings outnumber transactions, the market is slowly replenishing inventory.  

The local multi-family has also been a strong performer so far this year. That doesn’t show up in the local transactions count because most of the multi-family market deals are handled by investors on national commercial listing services.  

The multi-family component in NAR’s metro area report includes more data and context than what’s available from the local sources. It shows rents, demand and inventory increasing. The Johnson City metro area apartment property market is about the same as it is nationally, while the Kingsport-Bristol market is not as strong, according to NAR. A capsule of that report data compared to Q1 last year shows: 


  • Vacancy rate 2.2%, down from 3.2%. 
  • Effective rent per unit $840, up 4.9% 
  • Inventory, 6,441 units, up from 6,117 
  • Transaction price per unit $38,824, up 44.9% 
  • Market CAP rate 6.5%, down from 6.6% 


  • Vacancy rate 3%, down from 4.5% 
  • Effective rent per unit $872, up 8.9% 
  • Inventory 5,404 units, up from 5,309 
  • Sales price per unit $47,917, up 48.6% 
  • CAP rate 6.6%, down from 6.7% 

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 1,800+ 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