Local commercial real estate transactions ended 2021 at a decade high and are expected to perform well despite the prospects of higher interest rates, according to the 2021 Commercial Real Estate Report recently released by the Northeast Tennessee Association of Realtors.

Transactions from listings on the two local commercial databases were a 54.7% improvement from 2020, a press release from NETAR about the report said. Commercial leases and sales totaled 571 on the area’s two local databases for commercial listings, where the total in 2020 was 369.

“While office transactions had the largest number of deals for the second straight year, the Retail-Commercial sector had the strongest annual growth rate,” said Cassie Petzoldt, Northeast Tennessee Association of Realtors (NETAR) Commercial Committee chair. “Transactions across the board were consistently strong in both the third and fourth quarters. Out-of-state investors have and continue scouting for opportunities as they shift their focus from the secondary metro areas like Knoxville and Chattanooga to tertiary rural metro areas like the Tri-Cities.”

There were 99 leases and sales in the office sector on NETAR’s Commercial Market Listing Service (CMLS), the release said. The total for 2020 was 73. 2021 began with 119 office listings and ended with 69, the release said. The Johnson City metro area had slightly more inventory absorption than Kingsport-Bristol.

The Retail-Commercial sector saw 87 leases and sales, marking an increase of 81.3% from the previous year, the release said. Absorption was evenly divided between the region’s two metro areas.

Transactions in the Shopping Center sector increased 32.2% during 2021 to total 41, according to the release.

The Johnson City metro area dominated absorption in the Shopping Center sector, but the sector continues to have an abundant inventory, the release said.

Industrial transactions were up 50%, and commercial Realtors say there would have been more activity if the region had more inventory – especially inventory suited for the increase in last-mile functions.

Vacant land is the one sector that is segmented by both local databases. There were 2,065 transactions during 2021 – a 41.3% year-to-year increase, and about the same growth rate as 2020, the release said.

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