Year-over-year growth of commercial construction was down by three permits in the third quarter, but year-to-date the market is on a slow-growth pattern similar to the average sales price of single-family residential resales.
The Market Edge’s Commercial Building Trend Report shows single-digit year-to-date permit increases in Sullivan and Washington counties while every other county in the region – except Greene – posted declines.
Northeast Tennessee counties included in The Market Edge’s report for the Tri-Cities Region include Carter, Greene, Hawkins, Sullivan and Washington counties in Tennessee. Scott and Washington County VA are also included. Sullivan posted the largest number of permits and the largest year-to-date increase. The year-over-year Q3 totals show Washington Co. TN with three more permits than Sullivan.
So far, this year 539 commercial permits were pulled the seven-county region. That’s 0.6% better than the first nine months of 2015.
While that’s basically a flat market, this year is a respectable 11.3% increase from the first nine months of 2014 and 4.3% better than 2013.
Here’s a snapshot of county permit activity compared to the first nine months of last year.
Carter – 27, down three.
Greene – 55, up one.
Hawkins – 8, down five.
Sullivan – 205, up 11.
Washington TN – 169, up seven.
Scott – 7, down one.
Washington Co. VA – 61, down five.
The Tri-Cities’ 0.9% increase lagged the Chattanooga and Knoxville regions year-to-date permit performance. Both of those areas saw 5% increases.
According to Northeast Tennessee Association of Realtors President Marsha Stowell, at the end of Q3, there were 1.1 million square feet of commercial space for sale in both the Johnson City and Kingsport-Bristol Metropolitan Statistical Areas.
Lease space in the three-county Johnson City MSA was 1.3 million square feet. In Kingsport-Bristol it was 637,151 square feet, she added.
Glenn Perkins, a commercial Realtor with the TCI Group, said active listing in Washington County have been in a general decline so far, this year while Sullivan County has shown a general uptick over the past 12 months. “Completed transactions for Washington County increased over the first three months of this year and have been on a steady decline since. Sullivan County showed a decline in completed transactions over the first three months of the year with an increase only in May and June followed by a general decline.
Annual lease rates for Washington County dropped in early summer and then after a brief increase has remained flat while days on market have increased significantly Sullivan County has had a slow but general increase over the year while days on market remained relatively stable, although high.
The National Association of Realtors 2017 commercial real estate outlook calls for improvements to begin moving into smaller markets.
Lawrence Yun, chief economists, and K.C. Conway, senior vice president of cred risk management at SunTrustBank, expressed confidence that commercial real estate activity should remain on an upward trajectory, but with more uncertainty given the environment for higher interest rates.
Retail expansion and redevelopment continue with multi-family construction continue to be the most visible signs of commercial real estate development.