August was the best month for Tri-Cities area commercial real estate (CRE) so far this year. The transactions total equaled last August’s performance, and listing traffic was at its highest level of the year, according to the Northeast Tennessee Association of Realtors (NETAR) monthly Commercial Real Estate Report.
The report also notes the eight-month transaction total lagged the market’s 2019 performance, and there was a sharp inventory decline.
“Traffic and the number of deals have increased noticeably since spring,” Cassie Petzoldt, chair of the Northeast Tennessee Association of Realtors Commercial chair, said. “I look at the decrease in listing as something that is typical before presidential elections when there’s uncertainty about the candidates’ economic and business policies,” she added.
A recent survey of state business owners and managers found most think the state’s economy will rebound much faster during the next 12 months than the rest of the nation. The University of Tennessee’s Boyd Center for Business and Economic Research said two-thirds of respondents said strong business investment and government leadership would lead to a quicker state recovery.
Some factors in favor of the Tri-Cities economy are:
- The housing market is red hot.
- Consumer spending has increased.
- Interest rates are rock bottom, and the FED has signaled it won’t be raising rates for years.
- Small business optimist is improving despite renewed economic uncertainty
Negatives for the local economy are:
- There were 12,000 fewer jobs in July than in January. The biggest deficits were government and manufacturing, followed by leisure and hospitality.
- Some jobs are returning and there are examples of added jobs, but there’s also permanent layoffs due to recession related business closures and restructuring.
- Some of the returning jobs are for fewer hours and/or lower wages.
- Many businesses are still in distress.
There were 35 Tri-Cities CRE sales and leases during August – the same number as August last year. That’s the combined total for NETAR’s Commercial Multiple Listing System (CMLS) and those on the local Flex Multiple Listing Service (MLS). It does not include transactions on other listing services.
Listings in all CMLS sectors were down 34.8% from July, and Flex listings were down 28.8%.
The most active CMLS sectors were industrial, office, and vacant land sales. Flex transactions are reported by total and price and not segmented into the type of sales or lease.
So far this year, office transactions are performing 18.6% better than the first eight months of last year. Industrial deals are up 4.2%. The remaining sectors lag last year’s performance. The hardest-hit sector is multi-family, down, 80% followed by retail-commercial, down 41%, and shopping center, down 40%.
There were 348 CMLS listing last month compared to 534 in July. The current number of listing and change from July:
Industrial – 22, down 17
Office — 104, down 60
Retail-Commercial – 72, down 24
Shopping Center – 48, down 7
Vacant land – 101, down 74
There were 346 commercial real estate listing on Flex last month, down two from August last year.
NETAR’s Commercial Real Estate Trends Report capsules market conditions in Carter, Greene, Hawkins, Johnson, Sullivan, Unicoi, and Washington counties in NE TN and Scott, Lee, Washington, and Wise counties in SW VA.