CITY HIGHLIGHT, APRIL 2004

JACKSON ENJOYS PROGRESS IN ALL AREAS

Nissan Motor Company’s 4 million-square-foot manufacturing plant, which opened in 2003 in Madison County, Mississippi, has positively impacted the Jackson metropolitan area. The $1.4 billion facility, which is expected to create a total of 5,300 jobs by the end of this year, has economically influenced all segments of the market. However, the facility is not the only growth generator for the local economy.

Office

Highland Bluff North, the second phase of Mattiace Properties’ Highland Bluff project.

The medical and financial communities continue to thrive in the tri-county area. Both industries contribute to maintaining Jackson’s single-digit office vacancy rates and will continue to add a surge of activity in the office market this year.

The expansion of law firms in the metropolitan area will continue to be a major factor in the office market’s superior performance. Larger, more established firms are maintaining their rapid growth pattern and new firms are being created and expanding just as quickly. While some new firms are formed from spin-offs of the larger firms, the Jackson market has also seen an influx of firms from outside the area.

The central business district has benefited the most from law firm expansion. Parkway Properties recently announced the renovation of the Skytel Centre, which has attracted tenants like the Forman Perry Watkins Krutz & Tardy firm and several new companies. The company is building a new parking garage to accommodate the growth. And, within the last year, Phelps Dunbar Law Firm, Watkins and Eager PLLC and Butler Snow O’Mara Cannada & Stevens have expanded and taken a large segment of previously available space.

The legal trade also has boosted growth in the Northeast Jackson/Interstate 55 corridor. Armstrong Allen PLLC and Purdy & Germany PLLC, both regional firms, moved into new buildings this year.

Highland Colony Parkway continues to evolve as several new buildings opened last year. These developments include a four-story Class A development for the Copeland, Cook, Taylor & Bush law firm and a new headquarters building for BankPlus. Baptist Medical Center will construct a new medical office building on the north end of the parkway at Highway 463 this year, and H.C. Bailey Company has two Class A 100,000-square-foot structures in the planning stage at the Concourse at Colony Park.

The Lakeland Drive corridor is the fourth major growth region in the Jackson metropolitan area. The quality of new Class A office facilities remains high in this area, although the quantity is low. Occupancy rates in this market remain an outstanding 97 percent, due to superior activity of the surrounding medical industry and the high volume of retail activity.

— Andrew Mattiace, The Mattiace Company

Retail

Old Agency Square, a joint venture of Mattiace Properties Inc. and H.C. Bailey Companies, will be recognized as the region’s premier shopping and entertainment destination for all visitors. “The finishes will be unparalleled. The space will be dramatic,” says Richard Dean, project architect.

Jackson is Mississippi’s government hub, the core of healthcare for the state and home to five centers of higher education. Approximately 500,000 people live within the Jackson metropolitan statistical area, which is comprised of Copiah, Hinds, Madison, Rankin and Simpson counties. Residents are enjoying a strong housing market that is among the most affordable in the country. A number of starter homes and new developments in Byram made southwest Jackson one of the most active areas. Brandon experienced the largest growth in apartment housing with a 3.2 percent increase in new construction.

The opening of the Nissan plant drove home sales prices up in northeast Jackson and Madison County. The metropolitan Jackson area is also home to more than 350 computer technology companies, with more technology growth on the horizon. The city of Jackson recently announced plans to build a $17.5 million telecommunications training and conference center in downtown.

Hot retail areas include Flowood, which has a daytime population that exceeds 30,000 (this is six times more than the residential population). Flowood’s commercial corridor, located along Mississippi 25, is one of the fastest growing in the state. Dogwood Promenade, which will include a Target, Kroger, PetsMart and Stein Mart, will open by October. Aronov Realty is developing the $65.6 million, 301,401-square-foot project located on the northeast corner of Old Fannin Road and Mississippi 25. Dogwood Promenade is the second phase of a two-part development that includes Dogwood Festival Market, a $44 million project that opened in 2002. The two projects are expected to generate $200 million in annual retail sales and employ 1,500 to 2,000 people.

Dallas-based Rave Motion Pictures is scheduled to open an 82,000-square-foot, 18-screen movie theater at Dogwood Festival Market this year. The theater will be the fifth in the metro area.

Also in Flowood, Fort Worth, Texas-based Trademark Property is developing a shopping center, located on 62.69 acres at the northwest corner of Old Fannin Road and Mississippi 25. The proposal for the center indicates that it will be larger than the combined Dogwood developments. The center will include several retailers new to Jackson, such as Lowe’s Home Improvement Warehouse. This will be the retailer’s first location in Jackson, and it may also be considering a location in Ridgeland at the Crawford Farms development. The Home Depot has four stores in the metro area.

Pearl, located east of Jackson, has evolved into a thriving bedroom community of 14,000 residents. Due to its location near the Jackson International Airport and at the crossroads of two major interstates, Pearl has become a commercial district with a growing retail, industrial and residential base. Richland, located southeast of Jackson, has become one of the busiest distribution centers in the South. The city boasts an extensive industrial base and a major highway transporting more than 50,000 vehicles per day.

— Lynn Leonard, vice president of marketing, NewBridge Retail Advisors

Multifamily

The Jackson multifamily market continued its tremendous performance during the second half of 2003. The lack of new construction and the impact of the Nissan plant on the job market are positive factors affecting multifamily property owners in Jackson. Rents and occupancy are up, concessions are down and property sales were minimal for the second half of the year.

Overall occupancy during the second half of 2003 was 94 percent, a minimal decrease from the mid-year 2003 rate but an increase of 1.4 percentage points from year-end 2002. Street rents also showed an increase from year-end 2002. The overall rate for the period climbed 1.8 percent to $580 per unit, or 62 cents per square foot.

Two properties, one in Brandon and one in the Northeast submarket, added a total of 288 market rate units to the multifamily supply in the second half of last year.

Approximately 100 of the year’s expected completions were pushed into 2004, which brings the total number of units scheduled for delivery this year to 585. Absorption for the second half of last year totaled 160 units, slightly less than completions. But absorption this year has already reached 847 units, which is more than double the 410 completions in 2003.

The unemployment rate for the Jackson metropolitan statistical area dropped continually through the last half of 2003. In December, the rate was 3 percent, a 1.5 percent decrease from December 2002. The low 3 percent rate is less than the state rate by 1.7 percentage points and less than the national rate by 2.4 percentage points.

Jackson should see continued stability in the multifamily sector as it gets a brief reprieve from the addition of new supply. Occupancy rates could exceed 95 percent during 2004.

— Blake Pera, vice president, CB Richard Ellis Memphis Multifamily

©2004 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.