It’s easy for people to think only about homes when we talk about real estate. We drive in our neighborhoods and we see “For Sale” signs. Real estate is where we live, right?
Yes, but there’s another crucial component to real estate that helps to provide a full picture of the market. Commercial real estate is just as integral to the community as residential real estate. Even in an era of online business, brick-and-mortar establishments provide crucial needs every day.
As we all remember, a year ago, COVID-19 forced us all to stay inside to “flatten the curve.” To keep people safe, many businesses closed temporarily and, unfortunately, many temporary closures turned permanent. This led to an uncertain time for the commercial real estate market for much of the year.
According to the National Association of Realtors’ Commercial Market Insights for February, after-sales surged in December due in part to the rush to close deals by the end of the year for tax reasons.
Commercial acquisitions fell again in January, with sales volume down 58% from one year ago.
Acquisitions fell across all property classes: Retail (-73%), hotel (-73%), office (-69%) and industrial (-57%).
But there are signs that commercial real estate is starting to turn around. From Feb. 2020 through Jan. 2021, the economy has generated 12.5 million jobs, or 56% of the 22 million jobs lost during March and April.
However, there are 9.9 million nonfarm payroll jobs still to be recovered. About 40% of the job losses are in leisure and hospitality, followed by local government. Many schools, health care providers, social assistance agencies and professional and businesses services are also still not open. Only the finance and insurance industry had no net job loss.
I’m also glad to report that consumer spending on retail goods is up 4%, boosted by electronic sales, making up 16% of retail sales from 13% one year ago. New orders for durable goods as of December 2020 were 2% higher from one year ago, indicating that an economic recovery is in the works.
This news is hopeful for businesses, but there are some lingering questions. COVID has shown many employers that they can be flexible with working arrangements for their employees, possibly limiting the demand for retail or office property. In fact, 23% of the workforce force is teleworking, or 34.4 million, which is four times the level before the pandemic.
The bottom line is that if you’re looking to get into the commercial real estate market, consult a Realtor. We have advanced market tools and analytics that can answer your questions on purchasing, leasing and managing business and retail spaces. That’s Who We R.
Greater Chattanooga Realtors is The Voice of Real Estate in Greater Chattanooga. A regional organization with more than 2,400 members, Greater Chattanooga Realtors is one of 300 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. Greater Chattanooga Realtors services Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. Information: www.gcar.net or call 423 698-8001.