SOUTHEAST SNAPSHOT, SEPTEMBER 2004

Memphis

Office
The majority of new office development in Memphis, Tennessee, continues to be in the suburban areas of Cordova, Collierville and Germantown. “Medical office build-to-suit development continues to be very strong in the Wolf River corridor of Germantown Parkway, as many medical practitioners seek alternatives to traditional hospital campus settings,” says Carma Jude, affiliate broker with CRESA Partners in Memphis.

The suburban areas of Cordova, Collierville and Germantown receive the majority of office development because of the availability of developable land in these areas. As mentioned above, the medical community demand has driven the office development in the Germantown Parkway Wolf River area. This area will soon see Weston’s redevelopment of a vacant Wal-Mart site into a mixed-use office and retail development to meet demand. In the Poplar Avenue office corridor, the only new development is Belz Enterprises’ redevelopment of a previous hotel site.

Belz has begun demolition of the former Ridgeway Inn on Interstate 240 that will be redeveloped into a Class A office development in the Poplar Avenue office corridor. During the current office cycle, many savvy tenants have taken advantage of market conditions to move up to Class A buildings with landlords offering attractive lease rates and rental incentives. “The addition of the new Belz office property will add options for clients seeking these Class A options in the Poplar/240 area,” notes Jude.

The range for Class A rental rates in Memphis is $19 to $23.50, full service, with annual increases. The vacancy rate is approximately 15 percent for the overall Memphis office market.

Downtown will continue to draw new businesses that appreciate a downtown location and can take advantage of new and redeveloped property, new and different housing opportunities, and varied entertainment and lifestyle options in an urban environment. St. Jude’s Children’s Research Hospital, with its massive growth and call for new researchers, will continue to drive the desire to be near or in downtown.

Industrial
Development in Memphis, Tennessee’s industrial market is very slow at this point, according to Jill Schmitt, affiliate broker with CRESA Partners in Memphis.

The only significant development is by ProLogis, which has a site that is pad-ready. “Development of the building will start very soon, but other than that, there is not much happening in Memphis,” Schmitt explains. “Many projects have been put on hold. In the next couple of months, we should start to see more dirt work done but we are still waiting for a couple of larger empty boxes to be absorbed.” The overall vacancy rate in Memphis is 20.7 percent.

Most of the action is occurring in Southaven and DeSoto County, Mississippi. Development in DeSoto County is high because of more land and more competitive prices. “We will see pick-up in the Southeast market once the current vacancy rates go down, and I think there will be a pick-up in the Northeast market as well. Things will increase in the Northeast because people like to live close to where they work and there is still land available in that area for large industrial buildings.”


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