NETAR CMLS Blog

Q1 transactions down 18.5% from last year

Commercial Real Estate transactions during Q1 this year were down 18.5% from last year, according to a quarterly report from the Northeast Tennessee Association of Realtors (NETAR) Commercial Multiple Listings Service (CMLS).

March traffic to the CMLS web site declined 21% for the January and February levels. Commercial practitioners also reported that some of their clients were getting antsy as the initial reports of the Coronavirus pandemic began taking on a local focus in mid-March. That doesn’t mean interest is down, but there was a lot more looking than doing.

Sales transactions outperformed leases during the quarter and were only slightly lower than Q1 2019 sales. Lease transactions declined 26.5% from last year.

The top-performing sales subsection for Q1 was for office listings. There were 10 sales, up from four Q1 last year. Office sales also accounted for almost half of the sales transactions for the quarter.

Office listings also were the leader in lease transactions. There were nine transactions unchanged from Q1 last year.

Charts and graphs can be found on the NETAR CMLS Facebook Page.

Commercial Real Estate sales, leases, permits up – volumes down

It wasn’t the best year. But it wasn’t the worst. When you look at the data, 2019 was an OK year for Tri-Cities Commercial Real Estate (CRE). Sales, leases, and new building permits were up. But volumes were down. Several commercial practitioners described it as one of those years when you worked harder but made less.
At the same time, there was and continues to be pent up optimism focused on the fate of a casino in Bristol, Va., and a pending major development in Boone’s Creek. Those are just two examples and they’re hand-in-hand with the unknowns of this year’s presidential election and effects of the coronavirus on the economy.
Some economists are saying the US may already be in a recession – or very close to it. Others are more reserved. What’s for sure is it won’t be business as usual for a while.
Goldman Sach’s forecast is for “GDP growth slowing to 0.7% in the current quarter and grinding to a halt in the second quarter. The third quarter likely will see 1% growth, and the fourth quarter is expected to post a 2.3% expansion.”
THE NUMBERS
There were more local CRE sales than there were in 2018 – or since 2016. But volumes were down 10.9% from 2018 and 9.1% from 2017, according to the Appalachian Highlands Dashboard for Real Estate Analytics. There were 639 sales compared to 478 in 2018. The 2019 sales volume was $361.6 million compared to $405.8 million in 2018.
Combined lease transactions from the Northeast Tennessee Association of Realtors (NETAR) Commercial Multiple Listing Service (CMLS) were up by 10 from 2018 while there were five fewer sales. When combined, there were 230 transactions, up five from 2018.
There were 519 new commercial building permits last year – a 6.7% increase over 2018. The total permit value was $225.2 million, down 9% from 2018, according to The Market Edge’s year-end Commercial Building Permit Trends Report.
Here’s how new permits and value looked across the rest of the region:
Chattanooga. New permit down 25%. $445.6 million value down 27%.
Knoxville – New permits up 12%. $1 billion value up 14%.
Asheville – New permits down 23.8%. $348.4 million value down 31%.
DRILL DOWN 2019 v. 2018
Washington Co. TN
• sales, up 7
• Sales volume $133.7 million, down $53.2 million
• 175 new permits, down 29
• $87.9 million permit value, up 33%
Sullivan Co.
• 175 sales, up 115
• Sales volume $69.9 million, down $49.1 million
• 164 new permits, down 4
• $90.4 million permit value, down 10%
Greene Co.
• 64 sales, up 4
• Sales volume $38.6 million, up $13.4 million
• 72 new permits, down 12
• $16.7 million permit value, down 17%
Carter Co.
• 56 sales, up 2
• Sales volume $32.3 million, up $1.5 million
• 22 new permits, down 12
• $2 million permit value, down 82%
Washington VA
• 40 sales, up 10
• Sales volume $25.7 million, up $16.6 million
• 65 new permits, up 5
• $23.9 million permit value, down 49%
Hawkins Co.
• 35 sales, down 4
• Sales volume $10.7 million, down $7.7 million
• 14 new permits, up 8
• $12.4 million permit value, up 187%
Bristol VA
• 31 sales, up 8
• Sales volume $40.6 million, up $31 million
Johnson Co.
• 24 sales, up 11
• Sales volume $5.2 million, up $492,694
Unicoi Co.
• 20 sales, up 8
• Sales volume $361.5 million, down $44.3 million
Bristol VA, Johnson Co., and Unicoi Co. are not included in The Market Edge’s report.
The Appalachian Highlands Dashboard for Real Estate Analytics is a new venture by Don Fenley, supported by TechPoint’s Austin Ramsey and TCI Group’s Nina Heffner, and underwritten by Jerry Petzoldt’s TCI Group. CRE sales are recorded by deed transfers.

Tri-Cities retail get the attention, land sales get the action

There are several ways to look at the Tri-Cities retail real estate landscape. And they are as much about the evolution of retail as they are about the brick and mortar inventory.

1 – The Tri-Cities – like the rest of the nation – is over-retailed. The U.S. has a higher per capita percentage of commercial real estate devoted to retail when compared to other developed nations. The retail apocalypse is disrupting that.

2 – There’s a glut of vacant retail space. It’s requiring Realtors and landlords to press their repurposing ideas to fill some of the slack. At the same time, there’s some new retail construction.

3 – While some retailers maneuver for location, the new reality is the customer is now the point of sale. They no longer need a store to learn about or buy products. Retailers who create relevancy to today’s customers are doing OK. Those who are still trying to sell products via yesteryear’s model are struggling.

4 – While many retailers are consolidating stores or relocating in a quest for cheaper rent and a market sweet spot, retail sales and sales tax collections are up. A comparison of the Nov. 2009 to Nov. 2019 retail sales tax collections shows a 38.8% increase in the three-county Johnson City Metropolitan Statistical Area (MSA) Collections in the four-county Kingsport-Bristol MSA are up 36.1%.

Commenting on the local retail inventory situation, one commercial practitioner lamented it’s the worst he’s ever seen. While that’s not a universal observation, others say the market is not what they expected considering the state of the local economy and consumer confidence.

Last year there were 37 local retail-commercial sales and a combined 65 retail-commercial and shopping center lease transactions, according to the Northeast Tennessee Association of Realtors (NETAR) Commercial Multiple Listing Service (CMLS).

During January, retail sales and lease transactions were half of what they were during January last year.  Total commercial sales equaled last year’s sales while lease transactions were down 62%. Of course, those are only for CMLS listings. Commercial real estate has several national venues.

At the end of January, there were 93 retail-commercial and shopping center listings for the Johnson City MSA. The total in Kingsport-Bristol was 85 listings.

The property class with the most transactions was vacant land sales. It also dominated local listing – 137 in the Johnson City metro area and 59 in Kingsport-Bristol.

2019 Catylist highlights and latest happenings

New National Marketplace powered by Catylist: Commercial Exchange - w ww.commercialexchange.com
• We launched our new national marketplace, Commercial Exchange - an enhanced and invaluable national exposure benefit for our local market partners.
• We ramped up marketing for Commercial Exchange, and we are promoting it as a singular brand to the marketplace to increase awareness and obtain more views and leads for commercial professionals participating in the Catylist network.
• Commercial Exchange exposure is automatic and free for paying members participating on local market Catylist services. There is no need for your paying members to register or login at Commercial Exchange.
• Commercial Exchange is designed to augment and strengthen your local market Catylist service. Commercial professionals in your market area seeking to join Commercial Exchange will be directed to your service.
New Catylist Technology Platform
• We continue refinement of our new technology platform, which currently serves our local market Catylist Research services and Commercial Exchange.
• Transitions to the new technology platform for our Catylist CLS clients will begin in 2020. Stay tuned!
New Data Catylist API Terms of Use
• For the benefit and protection of our Catylist clients, individual members, and Catylist, we changed our Catylist API terms of use to limit the storage of client and member listing data on other sites displaying active listings outside the Catylist Network.
• Benefits of the new Catylist API terms of use - h ttps://www.commercialexchange.com/developers/terms
o Puts you and your members in full control of your valuable data and limits its storage elsewhere for non- authorized purposes.
o Ensures member data appearing on sites outside the Catylist Network mirror the same data on Catylist - no discrepancies.
o Strengthens liability protection for all parties.
New RPR Commercial Integration
o We recently strengthened the RPR Commercial value proposition for Catylist services that have requested RPR Commercial integration.
o Specifically, the RPR logo and multiple deep links to valuable RPR reports are now prominently displayed on all listings. New deep links to RPR reports include: trade area details, thematic maps, best location for a business, best business for a location, and more.

New Catylist Logo & Website – w ww.catylist.com
• We rebranded with a new Catylist logo that better represents our purpose for uniting the commercial brokerage industry nationally with a local focus and strategy. You can download our new logo and brand standards for your own marketing collateral on our new Catylist Media page – w ww.catylist.com/media/

• We also launched a new Catylist website designed to strengthen brand awareness about our services, and to share information on how commercial real estate professionals can join the Catylist Network through our local market services.
New Catylist Network Clients
o Finally, we are excited to share the Catylist Network continues to grow, offering more content and exposure for your members. Welcome aboard!
o Akron Cleveland Association of REALTORS®
o Birmingham Association of REALTORS®
o Central Texas MLS (CTXMLS)
 Four Rivers Association of REALTORS®
 Fort Hood Area Association of REALTORS®
 Temple-Belton Board of REALTORS®
 Victoria Area Association of REALTORS®
 Williamson County Association of REALTORS®
o Cincinnati Area Board of REALTORS®
o Dayton REALTORS®
o Rockford Area REALTORS®
o Scottsdale Area Association of REALTORS®
o Toledo Regional Association of REALTORS®

o The Catylist Network is now supported by 70+ associations serving over 18,000 paying members across North America with more growth on the way!

Tri-Cities commercial real estate sales flat in 2019; Sales, lease transactions combined for best year since 2016

There were 103 commercial real estate sales of properties listed on the Northeast Tennessee Association of Realtors (NETAR) Commercial Multiple Listing Service (CMLS) in 2019. That’s five below the 2018 total and doesn’t include sales listed on other commercial listing services. (See attached chart).
When combined with CMLS lease transactions for last year, the total local commercial real estate market had its best year since 2016.

While the inclusion of Kingsport on a list of the 15 cheapest places to buy land in America last week got a lot of social media attention, last year’s land sales across the region were flat with a small decline for the second straight year.

The property types that saw the most sales were retail commercial and industrial.

Local commercial real estate practitioners are reporting one of the inquiries they get is for industrial sites.
John Speropulos, Mitch Cox Realtors President, said in the year-end least transaction review, “There’re are not a whole lot of industrial on the market, and what’s there is not what many clients are looking for.” Of course, they is always the option to repurpose and upgrade existing industrial sites, but “there’s a little local sticker shock” associated with those costs he added.

Michael Green, Green Commercial Realty, added that industrial property was the “the most obscured property segment of all. I think it’s because we compete for users on a far wider geographic plain.”

CMLS’s current market statistics shows 1.4 million square feet of commercial listed for sale in the four-county Kingsport-Bristol MSA and another 736,066 square feet for sale in the three-county Johnson City MSA.
While assessments for 2020 vary, local commercial practitioners are “conservatively optimistic” about the New Year local conditions. The local market will likely feel the same slower growth projected for the national commercial real estate market. That’s a typical reaction during an election year.

The “election year” lull hasn’t dulled the positioning in the Bristol market as the quest to locate a casino in the Twin Cities plays out. An equal level of interest continues in the Johnson City market over the proposed development at Exit 17 in Gray.

Listings for land total 1,271 acres in the Kingsport-Bristol MSA and 1,288 acres in the Johnson City MSA.

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