How did the local commercial real estate market perform last year and what can be expected for 2004? Those were the topics discussed at the annual Nashville Economic Forum this morning held at the Willis Conference Center in Nashville.

Speakers representing office, industrial, retail and commercial development spoke regarding their niches in commercial real estate and Nashville.

“We have a pretty positive outlook but it’s going to be a slow increase,” said Mylinda Vick, Cherry & Associates broker, regarding Nashville’s overall office market. “Corporations have pent-up demand for the past two years. We’re going to see some growth.”

It’ll be a slow increase, Vick reasoned, because of the pace of the growth in the job market. Although companies are seeing increased demand for products and services, that demand has yet to overshadow the desire for increased operating efficiency with existing staff levels, she said.

The Brentwood submarket could potentially see new construction for office space. Brentwood saw a decrease in vacancy from 13.5 percent in 2002 to 10.5 percent year-end 2003.

“Small space has really picked up and caught on (in Brentwood). It’s getting hard to find some small space,” Vick said.

As for West End, Vick said the submarket has experienced some corporate down-sizing and needs some full-floor leases. Last year West End finished with 9.7 percent vacancy, compared to 2002 at 7.8 percent.

Nashville’s industrial real estate market increased last year from 70 million to 73 million square feet, primarily in the bulk market (buildings 500,000 square feet or more). For 2004, the Nashville market is expected to see some speculative industrial buildings built and absorption should increase, said Randy Wolcott, senior vice president of ProVenture Commercial Real Estate.

“We’re seeing positive trends in the bulk distribution,” Wolcott said. “Each quarter there was positive growth in absorption.”

But Wolcott tempered his outlook with caution and pointed to the jobless recovery and competition from overseas markets such as China, where manufactured goods can be made and shipped to United States cheaper than domestic manufacturing.

“Those jobs are probably not going to come back,” he said. “I think we’re going to have to replace them with different types of jobs.”

Nashville’s sole major commercial development lays on the shoulders of one local developer, John Eakin, chairman of Eakin Partners Commercial Real Estate.

Eakin Partners is developing RoundAbout Plaza, Nashville’s sole, major class A office development currently under construction.

Eakin spoke about his outlook for Nashville’s capacity for additional new development. In 2003 the Nashville area saw only 135,308 square feet of new development and 3.9 million square feet of available office.

We have many years’ worth of office supply capacity in the Nashville market, Eakin said. New development will be spurred by tenant demand more than anything else.

“You have to adapt to change,” he said. “Buildings today do work.”

On Friady, March 5, 2004, Mortgage rates returned to near 30 year lows. The big number out on Friday was the jobs number and it was far weaker than expected once again. This is not so good for the Bush administration, but for all potential homebuyers this news keeps interest rates low! Had the jobs number beat expectations, rates were expected to rise by as much as 1/4 to a 1/2 a point, instead they fell back an 1/8 of a point.

NEW YORK, March 5 (Reuters) – The average rate on a 30-year U.S. mortgage with no upfront points fell 1/8 of a percentage point on Friday to 5-5/8 percent, according to BestInfo, Inc.

The 30-year mortgage rate with one upfront point fell 1/8 of a point to 5-3/8 percent.

The 30-year mortgage rate with two upfront points fell 1/8 of point to 5-1/8 percent.