NETAR CMLS Blog

Corvid-19 spotlights office space trend; local cre markets lag last year’s performance

Tri-Cities commercial real estate sales dropped to their lowest monthly level this year during April, while leases saw a slight increase, according to the Northeast Tennessee Association of Realtors (NETAR) Commercial Multiple Listing Service (CMLS).

Local listings traffic took a hit during the last weeks of March and the first half of April as public attention focused on the coronavirus pandemic. It picked up during the latter part of the month and totaled almost 4,000 views for the week ending Saturday, May 9.

Year-to-data sales and lease transactions are lagging last year’s performance, as are Q1 overall real estate sales and the sales volume. There were 122 sales during the first three months of this year compared to 144 last year. The volume was $60.8 million, down $56.9 million from the same period last year, according to the Appalachian Highlands Dashboard for Real Estate Analytics. More details about those transactions and the five-year trend will come later this month with Commercial Real Estate Building Permits Trends Report.

Office sales and leases continue to be the strongest CMLS performers. The short and long-term office market landscape are getting renewed attention since the imposition of work-from-home and remote working is accelerating those fledgling practices

Lawrence Yun, the National Association of Realtor’s (NAR) chief economist, said the question is whether businesses will increase space to accommodate physical distancing for workers after the all-clear is sounded. Or will they continue – and maybe expand – the working from home and remote work practices. His position was remote working is a trend – one that would increase how office space is used. His comments came during a Zoom update on the effects of the pandemic on commercial real estate.

Shannon and Jose Castillo are at the forefront of the remote working infrastructure in the Tri-Cities. They think demand for co-working space like their Spark Plaza in Johnson City, Sync Space in Kingsport, and Cowork Bristol will increase. Shannon is also a commercial Realtor with Mitch Cox Realtors. Jose is a Johnson City motivational speaker and entrepreneur.

Now that millions of employees have experienced the world of remote work, some won’t want to go back to the office – especially not before there’s a Covid-19 vaccine. Some will likely never want to go back. Sixty percent of workers participating in a Gallup survey said they would like to work from home as much as possible even after the pandemic is over.

“It’s easy to see why: No need to spend time and money commuting, you can escape coworkers when you need to focus, and you have more control over your day. Granted, not all coworkers have the option to skip the office. But for those who do, this shift may be permanent, according to a New York Times report.

That has new possibilities for areas like the Tri-Cities that want to grow their populations with workers who have good jobs but have a poor track record of attracting them. It enables another desire that the pandemic is motivating those who can to relocate from high-density areas to more suburban and rural areas.
The full report with charts can be accessed at https://donfenley.com/2020/05/10/corvid-19-spotlights-office-space-trend-local-cre-markets-lag-last-years-performance/
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