SOUTHEAST SNAPSHOT, OCTOBER 2009

Jackson Retail Market

One of the main pains of the recession felt by landlords and developers is a ballooning vacancy rate. But unlike most of the Southeast, the Jackson retail market hasn’t buckled under the massive weight of empty retail boxes because there simply aren’t a lot of big box spaces in the first place. Justin Davis of The Shopping Center Group says 15 big boxes have come online in Mississippi this year, a number he sometimes sees in one metropolitan area elsewhere in the Southeast.

“Mississippi has never been in an over supply of retail,” Davis says. The retail that has been recently built in the state has already experienced some absorption, and Davis predicts that 40 percent of the new space has been spoken for within 12 months of it being delivered. “It feels really good to be in that situation,” he says.

Davis attributes the current situation to demand generated by the small amount of space. Also, the recession has driven down rent prices, so tenants are suddenly getting good deals for newly developed buildings. While tenants are having a fine time in the current market, developers have been slapped in the face by a tight lending market. Very little development is happening in the Jackson area, so firms are looking elsewhere for work.

“They’re looking to refine their operations where they are right now, reduce CAM costs where they can and things of that nature,” Davis says. “There are a couple of projects with site plans floating around, but nothing that’s going to be coming out of the ground anytime soon.”

Once banks start lending again, developers will have immediate opportunity. The GO Zone program, initiated to help redevelop properties damaged by hurricanes, has helped office developers build new spaces in the suburbs. Retail will follow these projects in the next few years, with firms creating shopping centers to fill newfound demand. Davis is heartened by the success of Renaissance at Colony Park, a mixed-use project that houses the state’s only Fresh Market. The 57-acre development, which is located at the intersection of Old Agency Road and Interstate 55 in Ridgeland, Mississippi, was created by Jackson-based The Mattiace Company. The 100-acre mixed-use development Market Street Flowood is also continuing to deliver retail space. The original plans also called for office space and a hotel. Tenants already open at the 500,000-square-foot center are performing well, Davis says.

“There’s demand for development in certain trade areas, and we’re going to see that coming around. We’re not going to see oversupply like we saw in the last 5 to 7 years across the Southeast,” he says. “Mississippi was on the verge of having a good bit more retail development, and that’s probably going to be staggered across many years now.”

— Jon Ross

©2009 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.