The regional commercial real estate market in November continued its recovery momentum with an increase of 44.1% compared to the transaction performance of the previous year. This year, all but one sectors outperformed the market in the first eleven months of 2020 and 2019.
“So far this year the market has seen 512 transactions – 191 more than last year,” said Cassie Petzoldt, Chair of the Commercial Committee of the Northeastern Tennessee Association of Realtors (NETAR). âSince late summer, the retail sectors – both commercial retail and shopping centers – have seen increasing rental and sales power. It didn’t outperform activity in the office sector, but combined they account for 41% of all transactions this year. “
Office transactions were stable throughout the year. The performance of the sector contradicts reports from national sources. Most of this data is based on the main metropolitan areas and does not include a breakdown by rural metropolitan areas. To date, there have been 87 office sales and leases through NETAR’s Commercial Market Listing Service (CMLS). The second local commercial database does not segment any commercial entries or transactions.
A report by Cushman and Wakefield suggests that most companies will adopt a hybrid office model and its full impact on future demand for office space is still in question. A market analysis by Crexi in the third quarter shows that secondary and suburban centers have a significant share of office rentals.
As of late November, there were 44 office listings in the Johnson City Metropolitan Statistical Area (MSA) with three counties and 40 in the Kingsport Bristol MSA with four counties. The Kingsport-Bristol inventory averages 53 entries per month, while Johnson City has an average of 43 entries.
The retail commercial sector has booked 81 CMLS transactions so far this year. They are evenly distributed between the Kingsport-Bristol and Johnson City metro areas.
The CMLS inventory in the industrial sector has decreased from an average of 21 entries per month to 16. Demand – there have been 49 transactions this year – has drained much of the inventory and not many new products have been added in recent years, although there is great inventory demand among companies competing for growing “last mile” capacity .
Vacancy sales have also remained constant this year. So far this year 40 transactions from both local commercial databases have occurred in this sector. The monthly average volume of offers had fallen from 163 in November to 147.
There were 48 new commercial entries last month, two fewer than last year and 25 fewer than in October.
Last month’s active inventory was 766 entries, 7.2% less than last year.
NETAR is the largest trade association in northeast Tennessee, Southwest Virginia region, representing over 1,500 members and 100 affiliates active in all aspects of the residential and commercial real estate industry.