- Press Release
CRE Insiders Optimistic About Sales and Leasing in 2013
Hopes for Middle Tennessee job growth fuels belief in continued industry success office tops the insiders’ list of the most promising sectors
NASHVILLE, Tenn. Jan. 15, 2012 – The job market is on the minds of Middle Tennessee’s commercial real estate insiders.
The largest percentage of respondents to the 3rd Annual 2013 Middle Tennessee Commercial Real Estate Survey said that continued increase of employment and career opportunities for Nashvillians would be the best thing that could happen in 2013 to strengthen the local commercial market.
The second most cited item on responders’ wish lists: stable national and local politics.
Sixty-four commercial real estate brokers, developers, building owners and investors took the survey, conducted by commercial real estate and design services company Southeast Venture, which gauged expectations about local sales, leasing and sector activity in 2013.
“When we surveyed our local commercial real estate community last year, the national elections were top-of-mind for most people, and they clouded our thoughts on the local market,” said Todd Alexander, principal at Southeast Venture. “This year, as the dust settles on the elections and national fiscal concerns are approached, we’re seeing that most in the industry really just need a little stability.”
Sixty-six percent of respondents believe that sales of Middle Tennessee commercial real estate will be better or much better in 2013. That’s up 2 percent over last year, but down from 87 percent of survey takers from 2011. Thirty-three percent expect sales to be stagnant in 2013 compared to 2012.
Low interest rates and Nashville’s attractiveness for business activity were the top two reasons given for the favorable rating of commercial sales. “Low interest rates will continue to support the sales market,” one responder said. “Nashville has become a very attractive place to invest,” another replied.
Limited supply, a still sluggish economy and changes in the tax laws were the three primary reasons given behind a stagnant or declining outlook.
Commercial leasing polled slightly worse than sales, with 63 percent of responders indicating that leasing will be better or much better than last year. This represents a two-year slide—last year, 74 percent of survey takers said that leasing would improve and 79 percent of responders thought that 2011 would fair better than 2010.
Excellent demand coupled with a lack of space, specifically large space, were the primary reasons given for the commercial leasing predictions. One responder wrote, “I believe demand will continue to drive the leasing marketing, but space constraints may mute the absorption.” Another added, “There is pent up demand for large tenant spaces.”
“With leasing—and with sales—seeing more construction and development in most if not all sectors would be a good thing,” said Wood Caldwell, principal for Southeast Venture. “As long as that development is well planned and executed, there’s certainly a growing demand to support it.”
The improving economy was another popular reason for the majority of survey takers who expect leasing to improve. Six percent expect commercial leasing to be worse in 2013 compared to 2012, that’s up two percent from last year’s data.
Office topped the list of commercial real estate sectors, with 69 percent of responders predicting that the office sector will perform better in 2013 than last year. Retail and industrial sectors were also viewed favorably, with 56 and 53 percent expecting better or much better performances in 2013, respectively.
The sector with the most promise in last year’s survey, Multi-family (with 79 percent predicting a rise in 2012 activity), is mostly expected to remain the same in 2013, with 44 percent of survey takers predicting the same year-over-year activity.
Most responders believe that real estate-owned (56 percent) and land sectors (47 percent) will remain constant in 2013.
About Southeast Venture, LLC
Founded in 1981, Southeast Venture is a diversified commercial real estate company guided by a mission of “Building Value by Valuing Relationships.” The firm provides and coordinates the delivery of real estate, design and development services. This unique, comprehensive approach to commercial real estate offers a cost effective and efficient way of meeting its clients’ commercial real estate needs. For more information, visit SoutheastVenture.com.