Tri-Cities commercial real estate (CRE) began looking a little more like the residential market in July.
Transactions increased. Listing sank to a seven-month low. And consumer activity increased. But when compared to July last year, the market was down 18 percent.
Cassie Petzoldt said the number of consumer contacts have increased as investors shop the local market for bargains and opportunities. Another positive sign is listing web traffic also increased. Petzoldt is chair of the Northeast Tennessee Association of Realtors (NETAR) Commercial Committee. “Due to nature of the commercial market – which is more closely linked to the economic and business cycle than the residential sector – its recover will be slower and more measured,” Petzoldt said.
The most active transaction sector last month was office, she added. “It led both lease and sales transactions in July and it did in June. And, although land sales didn’t live up to last year’s sales pace, that sector continues to get a lot of consumer attention – especially in the three-county Johnson City metro areas.”
Total commercial listings in NETAR’s Commercial Multiple Listing Service (CMLS) and on Flex – the local multiple listing service – dropped to 881 in July – down from 976 at the beginning of the year. Some of that decrease can be attributed to the volume of new listing not being replacing the 206 transactions so far this year because some owners have stepped back to see how the local economy recovers from the coronavirus effect.
Still, there has been a steady small new listing increase every month except May. There were 21 new listings in July.
While July was the best month of the year for local commercial transactions, total CMLS transactions were down 18 percent from July last year. Flex transactions increased from six during July 2019 to nine last month.
Activity varies for each sector of the commercial marketplace.
Compared to July last year, CLMS transactions in the office sector were up 22 percent.
Multi-family transactions were down 80 percent.
Shopping center transactions were down 34.6 percent.
Retail was down 42.2 percent.
Vacant land deals were down 40 percent.
Flex does not report the number of transactions by commercial sectors.
There were 1.1 million square feet of commercial space for sale in the Tri-Cities last month, 391,013 square feet for lease and 1,134 acres of land for sale. That acreage does not include subdivision lots.
NETAR’s Commercial Real Estate Trends Report capsules market conditions in Carter, Greene, Hawkins, Johnson, Sullivan, Unicoi, and Washington counties in NE Tenn. and Scott, Lee, Washington, and Wise counties in SW Va.