Office, land, industrial deals weathering Covid storm


Look at commercial real estate (CRE) transactions and the numbers paint an overall picture of a flat market. That’s accurate. Transactions are running almost 12% behind last year.

But there’s more to the story. Look past the pandemic savaged sectors. Some sectors are weathering the storm in pretty good shape.

So far this year, three sectors are outperforming transactions during the first 10 months of last year. Those sectors are vacant land, industrial, and office.

There are also ample examples of commercial real estate construction picking up. More about this as soon as the Q3 commercial construction reports are available.


Transactions in sectors hit hardest by the pandemic account for the market lagging last year’s performance. For example, so far this year there have been 10 fewer transactions in the shopping center sector and 22 fewer in the retail-commercial sector.


October’s market posed a small total transactions decline on the heels of its best two months this year. Compared to October last year, transactions are down 11.7%.

There were 30 transactions, according to the Northeast Tennessee Association of Realtors (NETAR) monthly Commercial Real Estate Report. September’s total was 31. During August, the total was 35.


The 10-month total from NETAR’s Commercial Multiple Listing Service (CMLS) was 176 compared to 197 last year. The Flex Multiple Listing Service (MLS) total so far this year is 103, up from 100 last year.

“The commercial marketplace continues to get a lot of attention, but total transactions are flat due to the depression in the shopping center and retail-commercial sectors,” Cassie Petzoldt, chair of the NETAR Commercial Committee, said.



Kelley Graham, Graham & Associates, said now that the casino decision is a done deal, many of those who had been looking at the market are beginning to get more serious about locations. He said that’s especially true of those affiliated with or interested in restaurants. Contracts with contingencies based on the Bristol casino outcome should begin showing up on reports for the last two months of the year.


Jay Goodson, ReMax Checkmate, says while the pandemic has been a disaster for some businesses, others that do not depend on customers “walking through the door” are in a growth mode. Some examples are law, finance, and real estate firms. And although the transaction data for the multi-family sector doesn’t pop out like office deals, Goodson thinks it has a lot of potential.


John Speropulos, Development Partner and President of Mitch Cox Realtors, says there has been some resizing, downsizing, upgrades, and expansions in the Johnson City office sector. “Rents are stable because no one is building new product.” So, the office vacancy rate is not changing appreciably, during the period of economic structuring and while businesses position themselves to right-size their operations.


Last month, the most active CMLS transactions were sales and leases of office properties, followed by industrial sites then retail-commercial and vacant land. The current year-to-date total for office deals is 63, six more during the first 10 months of 2019.

The vacant land interest has been high all year. There have been 22 deals so far this year compared to 19 during the first 10 months of last year.


The largest October increase in new listings across the region was in the shopping center – up 4 – and multi-family – up 2 – sectors.

The 175 vacant land listings lead the October CMLS listings.

The combined CMLS and MLS commercial listings October total was 928, up 8.4 percent from September.

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