About eight years ago, The Shopping Center Group LLC began encouraging its agents to work on deals in teams.
This usually meant the partnering of an experienced agent with a junior agent, allowing continuity of clients over the future of the company as agents retired.
When Robert Sloan joined the firm in January 2005 upon completing his bachelor’s in real estate at the University of Memphis, Shawn Massey made the newbie an offer he couldn’t refuse.
Massey, an adjunct professor in the graduate real estate program at the U of M, was planning a college mission trip to the Czech Republic, and was going to be out of pocket for about a month.
“I made a deal with him that whatever deals closed on my listings during that period I would split with him 50/50,” said Massey, partner with The Shopping Center Group. “He had a great month and my clients were very happy. We decided that we might be able to service our clients and still have a life if we worked as a team.”
And the rest is history. In 2010, the duo closed 39 deals together throughout the Memphis area. Collectively, they have leased more than 20 Walmart shadow centers throughout the Mid-South and beyond.
They represent both tenants and landlords in deals that usually range from 1,600 to 5,000 square feet. National clients the pair has been involved with on either side include Big Lots, AT&T, Dunkin’ Donuts, Family Dollar, GameStop, PetSmart and FedEx Office.
The Shopping Center Group’s motto is, “only retail … but everything retail.” The firm’s retail exclusive, single-operation platform allows Massey and Sloan to zero in on the sector without the distraction of multi-disciplinary activities.
“There is too much to know to be competent in all disciplines,” said Massey, who touted the company’s membership with ChainLinks Retail Advisors. “We can help you find the land for a new development, help you lease your shopping center, manage the center and when you are ready, help sell the asset. We’re kind of from cradle to grave.”
Part of that process involves overcoming some of the city’s commercial real estate hiccups, including Memphis’ geography. With limited capital and in efforts to maximize profit, retailers follow a logical progression, Massey said.
“Memphis just happens to be at the western border of the Southeast and at the eastern border of the Southwest,” he said. “One of our shoe retailers in Charlotte can’t skip over a state to sell his shoes, he has to send trucks out logically and can’t have a store more than two hours from another store. That’s the same for all retailers – as they go across, they need to stop in Knoxville, Chattanooga, Nashville, Birmingham.”
Another barrier to retail entry is the state’s reliance on property tax, whereas competing states rely on a personal income tax to generate their revenue. So while Memphis’ base rental rates may be competitive to peer cities, the triple net lease – encompassing all real estate taxes, insurance and maintenance – often runs double, which significantly raises occupancy costs.
“Retailers must think, ‘Do I make the sales to justify that?’” Massey said. “Memphis has a market that can produce sales, but by having a higher tax burden, it reduces the profit for the individual retailer.”
With no new developments taking place locally, national retailers searching for Class A real estate will take their capital elsewhere, Massey said. But while Memphis doesn’t have the density of an Atlanta or a Dallas, it has the highest density in the state of Tennessee.
Depending on where a store is located within three miles of Interstate 240, the trade area can be anywhere from 200,000 to 250,000 people.
“Memphis is extremely unique when it comes to the other markets that we’re compared to,” Sloan said. “When comparing Memphis to Nashville, people are incorporating Franklin, Cool Springs, maybe Murfreesboro and all of the outlying areas. People will compare us to Atlanta, North and South Carolina. Yes, we are comparable in size, but you need to look at Louisville, New Orleans and St. Louis. On paper, we’re the same, but it’s not apples to apples.”
From crime rates to education, Massey and Sloan are steadfast at debunking the myths that surround the city and luring business in to build the local economy. The team prides itself on an in-depth strategy that focuses on telling the whole story to potential clients.
“Pick them up at the airport, drive them around, look for signs that say, ‘space for lease,’ call the landlords for information, drive them back to the airport. This stuff is easy,” Massey said. “We do a lot more GIS (Geographic Information Systems) scoring and analytics for sites than we had to five years ago. We want to make sure we have the best site open at the right time instead of just negotiating for space.”