NETAR CMLS Blog

2018 mid-year commercial real estate update

Look at just commercial real estate data for the first half of 2018 in the Tri-Cities and it's unremarkable compared to the rest of the economy. New building permits trailed the first half of 2017 by 28%. Total transactions reported by the Northeast Tennessee Association of Realtors'® (NETAR) Commercial Multiple Listing Service (CMLS) were down by 17.9% while listing was up 21%. At the same time, there's the fear and loathing about how national politics are or might be affecting the economy.

That's a stark contrast to an economy that's booming. Consumer confidence is high. The region is at full employment. Wages are up – not by a lot but they're up. Retail sales and sales tax collections are doing quite well. In fact, Kingsport-Bristol has the best sales tax collection market share performance in Northeast Tennessee.

Attribute some of this contrast to the fact that commercial real estate data is a lagging economic indicator – especially the local commercial real estate market. It doesn't lend itself to the short-term analysis that residential real estate affords. While residential real estate and the housing market frequently leads the rest of the economy out of bad times local commercial real estate often trails the residential market by a year to a year-and-a-half.

By The Numbers

According to the Market Edge's mid-year commercial building permit report, there were 216 new permits issued in the Tri-Cities region during the first six months of this year compared to 301 last year. NE Tenn. counties included in the report include: Carter, Greene, Hawkins, Sullivan, Washington. Scott and Washington counties in SW Virginia are also included. New permit totals have slowly declined every year since 2011. The dollar number attached to this year's permits was $72,865,805, down 37% last year. From an East Tennessee perspective, the Tri-Cities in the only area with a mid-year decline in permits and permit value.
There were 92 transactions of CMLS listings between January and the end of June compared to 112 last year. Listings originated during the same period totaled 183, up from 156 last year. While a CMLS listing receives the broadest exposure, some commercial listings are not included on other platforms. CMLS listings can be searched at https://www.netarcmls.us/ . The site also has a featured listing section, a directory of commercial members and a capsule report of recent deals.

At the end of August CMLS had listings for 18.7 million square feet of commercial space for sale; 724,213 square feet of commercial space for lease and 1,025 acres of land in the three-county Johnson City MSA.
Listings for the four-county Kingsport-Bristol MSA included 1.3 million square feet of commercial space for sale; 548,670 square feet for lease and 1,179 acres of land.
Although it didn't come at a time to affect conditions in the mid-year report news about the potential redevelopment of part of the old Bristol Mall to a casino has fired up interest in that market, and the region's, commercial real estate and economic evolution.

See the full report on the Commercial Real Estate page at the NETAR Web Site at https://netar.us/mid-year-commercial-real-estate-update
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