KNOXVILLE RANKED AS A “MILLENNIAL MAGNET” BY USA TODAY

KNOXVILLE RANKED AS A “MILLENNIAL MAGNET” BY USA TODAY

High national rankings keep rolling into Knoxville.  USA Today recently put Knoxville on its list of “Millennial Magnets”, a list ranking cities that have more 20-somethings than teens. These cities—rooted in high education, technology and development—are serving as new kinds of cities, born from deep demographic shifts and built from the power of technology. Knoxville, like many of the other cities listed, were traditional college towns that attracted students who then left after graduation for work. However, Knoxville has become a post-college town.

The region has long been known as ‘Innovation Valley’ by regional economic development agencies due to the concentration of scientific and technological assets that surround the area, as well as business sustainability efforts. The availability of high wage jobs for educated individuals at places like Oak Ridge National Laboratory, Y-12 National Security Complex, The University of Tennessee and numerous recession-proof healthcare industries surround the area make those that come for an education more likely to stay.

Ranked 6th by Forbes magazine among Best cities for Jobs, the area is #1 in green job growth according to the Brookings Institute. By combining technological resources with the Knoxville area’s central location, the region is competing for top level jobs and job creators in the expanding green industry.

According to the ACCRA cost of living Index, Knoxville’s cost of living is well below the national average, and either competitive with or lower than each of its southeastern competing cities like Memphis, Nashville, Charlotte, Raleigh, and Columbia.

These things, combined with a thriving cultural, educational and recreational landscape make Knoxville a major player as a growing city full of future business leaders.

Student of the (CRE) Game

The largest gains in the commercial real estate market in Knoxville over the past year have been in multi-family.  More specifically, in student housing.

Projects are popping up all over downtown and west Knoxville with a focus on Fort Sanders and now Sutherland Ave.

In 2013, Rick Gentry, Cushman & Wakefield | Cornerstone's multi-family specialist, closed two of the largest student housing transactions in the market.  He talked to WBIR about the explosion in the segment.


Student-housing Explosion in Knoxville

Click on the link for the story.

KNOXVILLE RETAIL SNAP SHOT

This morning Cushman & Wakefield | Cornerstone is releasing the third quarter results of the Knoxville retail market.  Its an interesting look at changes that have been made in the market in the last few months.  

RETAIL SNAPSHOT - KNOXVILLE, TN 3Q 2012  

The outlook for today’s retailers remains challenging as many find themselves confronted by reduced consumer spending and weak credit market conditions. New economic realities have resulted in a new order of buyers who are more price-conscious and careful about the discretionary purchases they make. The critical challenge for retailers under these circumstances will be delivering a compelling in-store experience that drives profitable growth in 2013. The one-size-fits-all approach doesn’t work for all shoppers – nor all locations. To grow, many retailers are shrinking, sometimes with smaller stores, sometimes by introducing smaller, more intimate and approachable locations within larger stores. 

RETAIL MARKET OVERVIEW    

The vacancy rate closed the quarter at 6.1%. Net absorption stands at a negative 348,579 square feet (sf). Rental rates increased slightly from the second quarter 2012 levels, ending at $11.31 per square foot (psf).

This summer, a South Carolina developer paid $1.7 million for a 4.4- acre site next to the Wal-Mart on Norris Freeway, and said it planned to develop a retail center for 10 tenants. Hibbett Sports recently announced that it will open a store at the site.

There were several significant lease transactions for the quarter including an 18,360-sf lease at 1665 E. Andrew Johnson Hwy. to Badcock Furniture (seller-represented by Cushman & Wakefield|Cornerstone). Also of note is the lease at 1115 N. Charles G. Seivers Blvd to United Grocery for 18,225 sf.

Several significant sales took place over Q3 12, including the closing of 640 Plaza (44,435 sf) for $5.2 million. Also, Goodwill Industries recently closed on a 45,178-sf neighborhood center in the North/Broadway submarket for $2.5 million. 

“The consumer hasn’t exactly thrown in the towel, which is encouraging because they’ve been battered and bruised in recent

months with very slow job growth,” said Millan Mulraine, senior U.S. strategist at TD Securities Inc. in New York. “We’re off to good a start in the third quarter. I do question the sustainability of the current level of spending. It can only be sustained if employment growth continues to accelerate.” 

OUTLOOK

“We have seen a major upswing in the Knoxville and east Tennessee retail market. With the new developments happening in West Knoxville, Oak Ridge, Halls and the growth at Emory Road, we feel very positive about new east Tennessee retail. National tenants are expanding into areas that had been previously underdeveloped and new anchors are moving into the area developments.”

-John Rebori, CCIM, Associate Director, Cushman & Wakefield | Cornerstone

If you want to see the entire report and stats please click on the link below.  

http://library.constantcontact.com/download/get/file/1104796466421-635/Knoxville_AMERICAS_MarketBeat_Retail_2page_Q32012.pdf 

CCIM Nashville Economic Outlook

I spent an interesting afternoon at the Nashville CCIM Economic Outlook Conference yesterday.

Nashville truly has exploded in the last decade and Janet Miller,  chief economic development and marketing officer for the Nashville Area Chamber of Commerce, provided fascinating facts.

Snap shot:

• In the last 16 Nashville has courted 99 projects for expansion to the metro area.  Janet emphisized these are SERIOUS opprotunities for the region not just phone calls for companies looking for handouts. 

• If Nashville was able to successfully recruit all the projects they would total 33,000 jobs and cover 18,000,000sft of commercial real estate (office and industrial)

• 60% of the projects were considered Corporate Headquarters.  Funny quote from Janet, "Twenty years ago if a headquarters called us looking for a location we would not know how to act."

• Data Centers have become a huge part of the relocation process.  Bank of New York has invested more than $1 BILLION into a new data center in Nashville.  Why?  Because Tennessee is not subject to severe weather (like hurricanes) and earthquakes.  Also, Nashville is not considered a prime terrorist target.  Bank of New York's previous data center was destroyed on 9/11.

• The key to recruitment can be "The Spread".  Basically the cost of living vs the cost of business.  

• Nashville is the #1 destination for companies and employees moving out of Los Angeles.

I hope the trend extends to Knoxville.

Blogging Change....

Time to make a change to the blogging platform...

I know most of you are asking "Why change now?  You haven't blogged in a LONG time."  Its a simple answer: Time.  The hours required to write a long-form blog are just to overwhelming to put together a quality product that I want to put a companies name on.  So we are going to try something different. 

Instead of a weekly, long blogs we are going to try shorter, more frequent posts.  Sometimes it may be posted a few times a week.  Other times is will be once a week.  It just depends on what information is coming out that day.  There will still be quarterly market reports and longer posts but they will not be as often.  However, the quality of the product will still be among the best in the business. 

Stay tuned for more...

John Adams (@johnmadams3 on twitter) is a presenter at this weeks SIOR National Convention in Los Angeles.  John is an expert in commercial real estate technology, along with being one of the best brokers in the region.  You can follow his blog at www.johnmadams3.blogspot.com.  He will have more information from SIOR. 

Next month we will be at the Cushman & Wakefield Symposium in Las Vegas.  Again it will be a great opportunity to gather information we can use on the blog. 

Thanks for reading. 

As always, you can reach us at 865-450-8883 or www.cornerstonecres.com

Yes! You need a Commercial Real Estate Broker!

Commercial brokers get the deal done.

There are literally dozens of variations of commercial leases; full service, gross, modified gross, NNN, NN, absolute NNN...you get the idea.  We will get into leases at a later date; but they are just one of the reasons you need to have a commercial real estate broker on your side when looking for space, negotiating a lease, or purchasing/selling commercial property.

Let me answer the first question most commercial realtors get asked when working with a client for the first time...                                      "How does the broker get paid?"  While each case can be different, depending on the circumstances, in the Knoxville market it is standard business practice for the landlord to pay the commissions in a lease.  Hence, it doesn't cost the realtor's client (the tenant) a dime to look for space.  

Commissions for property sales are similar to residential practices in that they are negotiated in the sale contract.  

In the eyes of the state of Tennessee, and national groups like REALTOR, there is no difference between a commercial realtor and a residential realtor.  We all have the same licenses and took the same classes; it’s what we do with the license after it is earned that makes the difference.   Many commercial realtors earn designations that help educate them on marketing properties, helping clients make decisions on proper investments and the like.  Some you may have seen include CCIM (Certified Commercial Investment Manager, http://chapters.ccim.com/easttennessee); SIOR (Society of Industrial and Office Realtors, www.sior.com) and CPM (Certified Property Manager).  These realtors have spent hundreds of hours in courses, and years in the field, to prepare them to meet their client's needs. 

Two of the biggest reasons to use a commercial realtor are time and experience.  

Time is the one thing everyone has a shortage of.  Instead of spending your day driving around town looking for space that might be available (and hopefully in your price range) commercial brokers have market knowledge and multiple interactive data bases at their finger tips to steer you in the right direction.  Say you want office space in west Knoxville...within minutes a commercial realtor can tell you what is available in that area, what it costs and the type of development in which the office is located.  The same can be said for retail and industrial space.  This way you can spend 15 minutes narrowing the list of potential spaces instead of three hours just trying to find out what is available and tracking down phone numbers.   

Commercial realtor's experience is what saves you money!  Any broker worth his salt will know the important details you need to help you make an informed decision.  Is this a new building?  If so, what kind of tenant improvement allowance will be included?  Is the rent abnormally high for the market and the economy (boy, does that really play a part now)?  What other kind of leasing incentives might the landlord provide? Should you lease or buy? 

Commercial realtors will also have the experience to walk you though a lease (although most realtors are not lawyers and any lease should be reviewed by legal counsel prior to signing) to explain things like; force majeure, estoppel, operating expenses etc...

On the other side of the ledger, property owners can use the expertise of commercial realtors in much the same way.  Instead of spending your precious time looking for a tenant for your empty building a realtor does it for you.   Commercial realtors are able to market the space via local and national data bases (basically a commercial multiple listing service), they can market the space through signage on the property and most importantly they talk to other brokers every day.  It helps them keep the pulse of the market; who is looking and how much space are they looking for.  

Commercial realtors can also help keep you apprised of market conditions.  If several of the building around yours lease space for well below what you are asking the broker can determine if you are asking too much.  Commercial realtors are paid to know this information.   

Also important to owners is disposition of the property.  Better described as “what are you going to put in your pocket when you sell”.  There is an entire CCIM course related to these transactions.  How should you price your property?  What kind of capitalization rates (cap rate) can the market withstand? What tax implications do you have when you sell it?  Experienced commercial realtors can walk you thru all these steps.

There are many more details that we can get into regarding commercial brokers.  The items above are strong evidence that an experienced broker is imperative to the success of your property search or ownership. 

Cushman & Wakefield|Cornerstone CRES (www.cornerstonecres.com) is the market leader in experience.  More than three dozen brokers canvas middle and east Tennessee in the office, retail, multifamily and industrial markets.  From simple lease deals to complicated capital market  international transactions; Cushman & Wakefield has the resources to make the deal as easy as possible for its clients. 

Justin Cazana, CCIM

Principal/Broker

Cushman & Wakefield|Cornerstone CRES

Welcome to the inaugural edition of the Knoxville Commercial Real Estate Blog!

Welcome to the inaugural edition of the Knoxville Commercial Real Estate Blog! 

If you want details about commercial real estate events in Knoxville and all of East Tennessee this is the place to be.  My name is Justin Cazana and I am one of the principals/co-founders of Cushman & Wakefield|Cornerstone CRES in Knoxville.  We opened the office 13 months ago and immediately had an impact on the commercial real estate market.  In those 13 months Cushman & Wakefield|Cornerstone CRES has developed a portfolio of more than three million square feet of commercial real estate space in East Tennessee.  You can get more details in our firm by visiting our web site at www.cornerstonecres.com.

Our plans are to have weekly (Wednesday) posts on the blog to discuss everything in commercial real estate, but mostly focusing on the Knoxville market.  We will post more often, when something big happens in the market .

This will not only be a place to learn about Cushman & Wakefield|Cornerstone CRES , but to learn about commercial real estate in general.  We will talk about market trends, types of leases, legal points to consider (although I am not an attorney and recommend that you do seek legal counsel prior to signing any lease or related document), why you should have a broker, etc…

But first a little information about Cushman & Wakefield|Cornerstone CRES.   We have three offices in Tennessee with headquarters in Nashville.  We broker, lease and manage more than seven million square feet in middle and east Tennessee and represent some of the most recognizable buildings in the state including Nashville's Pinnacle building and Knoxville's First Tennessee Plaza and Century Park.  The Knoxville office has 11 brokers that specialize in office, industrial and retail leasing plus the brokerage of multi-family and investment properties.  Combined there is more than 120 years of real estate experience in the office.  All of our brokers are involved has CCIM, SIOR and/or ICSC membership. 

Cushman & Wakefield|Cornerstone CRES’s marketing and leasing efforts have been at the forefront of the Knoxville market since the day we opened our doors.  We have also led the way through social marketing; with the first Facebook and Twitter  pages dedicated to listing properties.   This blog is the next step. 

Cornerstone CRES Knoxville

Click to Follow us on Twitter @cresknoxville

Check back with us often for more updates on Cushman & Wakefield|Cornerstone CRES  and the Knoxville real estate market.  And if you are looking for office, retail or industrial space, contact me at jcazana@cornerstonecres.com or call 865-617-2989. 

Next edition…the Knoxville market overview.