Tri-Cities commercial real estate activity hits high point
Tri-Cities commercial real estate had one of its best-ever months in August.
There were 64 commercial leases and sales, up 82.9 percent from last year. It’s also noteworthy that activity in the Commercial-Retail and Industrial sectors almost doubled from July while Office transactions cooled by a third. Those three sectors are this year’s leading performers in the region’s market.
So far this year, the 65 deals in the Office Sector outnumber those in Commercial Retail by one.
There were 12 new transactions in the Industrial Sector, bringing the year-to-date total to 41. During the first eight months of last year, it had 25 transactions. So far this year, there have been 375 commercial transactions. During the first eight months of last year, there were 149.
“The labor shortage has tempered some activity, but not the enthusiasm in the Commercial-Retail and Shopping Center sectors,” said Cassie Petzoldt, Chair of the Northeast Tennessee Association of Realtors (NETAR) Commercial Committee. “The local transaction volume has returned to pre-pandemic levels.
The biggest potential headwind is how the Covid Delta variant surge will affect the local economy. At the end of August, it had not significantly dampened the local commercial real estate landscape.”
So far this year, the real estate industry continues to lead the local economy. Driven by low mortgage rates, new residents moving to the area and the work-from-home trend, the new and existing home markets remain robust. There is more activity in the multi-family sector. And construction in both the commercial and residential sectors is on the upswing.
New commercial listings, active inventory, and web traffic also posted double-digit increases in August, according to NETAR’s monthly report.
The only sectors where inventory was down from July were industrial and vacant land. “That can be attributed to the surge in transactions,” Petzoldt said. Inventory was stable or slightly higher in all other sectors.
There were 349 new commercial building permits in the Tri-Cities during the first half of the year, according to The Market Edge, a Knoxville-based building permit compilation service. That’s 48 more than the previous year. The permit value of this year’s new permits was $97.5 million compared to $104.8 million during the previous year.
Most of the new permit activity was in the region’s two largest counties. Washington Co. Tenn. had 131 permits, up from 113. Sullivan Co. had 126 new permits, up from 99 during the first half of last year. The largest gain was in Washington Co. Va. – 47 new permits, up from 29 last year.