Andrew Riddle, Commercial Real Estate Broker at Whitney Commercial Real Estate Services and principal member of the Building Owners and Managers Association sees interesting opportunities within his industry.

After six years as a commercial broker and prior experience in construction management and as a general contractor locally and abroad, he said that he has a unique perspective to the industry. Riddle finds older commercial properties with potential and readapts them for new and modern use. “I didn’t plan on my career to turn out this way, but that’s what happened,” he said. “It takes knowing what things cost, how to put them together, as well as an understanding of a niche market’s players, politics, and zoning.” 

It is more environmentally friendly to approach older commercial buildings in this way, according to Riddle. “One fifth of energy used is in new construction. When you take an existing structure and readapt it, you’re saving so much of that energy,” he said.

“There is a corridor of hotspots between Atlanta, Greenville, and to the port of Charleston. So much transportation happens along this route,” Riddle said. “We are just outside of that corridor, a corridor that is only going to grow. It’s one of the highest areas of demand in the nation for real estate.” Asheville is the gateway market for the rest of Western North Carolina. According to Riddle, Hendersonville rides the economic coattails of Asheville. He said that the economy of Asheville has a direct impact on Hendersonville, and vice versa.

“I want to make Hendersonville grow in a way that’s responsible,” Riddle said. “Conscientious development is necessary for community betterment, and I would never leave the community worse off than I found it. Everything is too temporary, too disposable. In Croatia, I saw homes being used for 400 to 600 years. Now that’s permanence.”

Riddle said that he sees a bridge being built between commercial and residential real estate that could help with the lack of housing business owners have been seeing since before the pandemic.

“An incredibly profitable commercial property on the market is a new mobile home park,” he said. “Some trusts that work on Wall Street are seeing this as an opportunity because the largest prohibitor of this can be zoning. These trusts are essentially purchasing the zoning, creating a mobile home park on a commercial property, and thereby using their investment to allow people to live for 30 percent of their annual income. This could be beneficial to those people as well as the businesses that want to hire them.”

“Interest rates are now affecting people’s relocation; however, commercial transactions are not affected in the same way,” Riddle said. “Many clients are using a 1031 exchange. They are selling similar properties, earning equity, and using that equity to put right into another property to defer capital gains tax. They want to deploy their cash, so the interest rate isn’t affecting these commercial purchases in the same way that it affects residential real estate.” For those who do have to get loans, Riddle said interest rates are a major factor. 

The biggest hurdle in commercial real estate right now, Riddle said, is inflation. “Investors are not losing money on major projects, they are passing the costs onto their clients,” he said. “Commercial pricing will either stay where it is or go up, and it’d take finding a diamond in the rough to get a really good deal.”

Riddle said that he does see the supply chain starting to loosen up and the labor force become more readily available. “Subcontractors are now more competitive as opposed to ‘bidding to lose’, where they bid a price too high because they can’t even get around to it. The price of lumber has also gone down,” Riddle said. “This means that renovations to commercial properties may be getting easier. 

As a destination location, Riddle said he believes WNC will continue to do well economically. “There’s lots of potential for growth around this region. It’s really a great place to be as a business owner,” he said. “You can’t compare what is happening in top-tier markets and big cities to small towns like Hendersonville. Other areas have a vacancy rate of about 10% to 12% in commercial buildings. Smaller markets like this one have only about 3%.”

In Hendersonville specifically, Riddle said that he believes Main Street will look a lot different in a few more years. “Better rates in smaller markets like ours make it easier for big investors to buy up these properties that haven’t sold in the last 30 or 40 years,” he said. “We have such a wide range of rent rates, anywhere from $5 to $20 per square foot annually, a difference that you’re not likely to see in most markets. Elder property owners have held these properties and rented them below market value in exchange for completing little to no maintenance or updates, but that’s starting to turn. People are selling these properties to investors which will increase the market rent rate. We now have a Fortune 500 company on Main Street. Of course we would rather see only local businesses, but when a city like Hendersonville starts growing up, it’s going to get bigger players.”