The Shopping Center Group is seeing activity perk up a bit in 2013 following several years of sluggishness in the local retail market due to the recent recession.
“It is definitely a lot better than it was two to three years ago. We are busier than we were then,” said Danny Buring, managing partner of The Shopping Center Group’s Memphis office.
Activity for his office is up nearly 20 percent so far this year, with 45 transactions completed – up from 38 during the same period last year – including a 75,000-square-foot lease for Floor & Décor at the Perimeter Shopping Center.
The Memphis office and its five-person staff – including partner Shawn Massey and brokers Gary Shanks, John Reed and Robert Sloan – currently leases a total of approximately 4 million square feet of retail space and represents 100 retailers, numbers the office has hovered near for the past five years.
“I think we hit a wall of sorts, as there are only so many third-party opportunities within a 100-mile radius of Memphis,” said Buring, who cites companies like Weingarten and Belz that handle the leasing of their own properties.
Overall, Atlanta-based The Shopping Center Group leases about 55 million square feet of retail space and represents roughly 350 retailers across the Eastern U.S.
Danny Buring is managing partner of The Shopping Center Group. The company provides retail real estate brokerage.
(Daily News/Lance Murphey)
“Right now we are extremely active in Midtown, the Poplar Avenue corridor in East Memphis, and Hacks Cross at Winchester Road; and, of course, the Wolfchase Mall area in Cordova is always big for us,” said Buring, who still classifies the current local retail market as challenging. He cites the west side of Winchester Road near the Hickory Ridge Mall as one particularly troublesome area.
“We have some projects there that still have some big holes. It’s at the point where some owners have torn down their boxes simply because they did not want to pay the taxes on them,” he said.
Some retailers like Target simply packed up and migrated a mile east down the road to the thriving Hacks Cross and Winchester area.
Grocery store-anchored neighborhood centers continue to be the bread-and-butter of the retail industry.
“The grocery anchor is as good as it gets for our industry,” Buring said. “Value-oriented concepts have been very popular over the past couple of years, while higher-end retailers have taken a beating.”
One new concept that could take root in Memphis is Five Below, which just opened a 600,000-square-foot distribution center here and is now possibly looking at retail sites around town.
Buring thinks the future of mall space in Memphis and the rest of the country will involve open-air malls like Carriage Crossing in Collierville, as opposed to enclosed malls like Wolfchase.
“We will not see an enclosed mall being built in Memphis again, and you probably will not see any more enclosed malls being built anywhere in the U.S., unless it is weather-driven in places like Minneapolis,” said Buring, who has been with The Shopping Center Group’s Memphis office since it opened in 1999. “Before the recession hit, there were only six malls being built across the country because it is so expensive to operate them.”
He also expects to see more urban infill projects in Midtown and parts of East Memphis.
“Developers and retailers are looking at where people live today, so we are seeing a renewed emphasis on infill projects in already established areas,” Buring said. “Land will be more expensive because existing structures have to be torn down, but I think tenants are going to be willing to pay the rents to get into more dense existing areas.”
Since the recession ended and the economy began to improve, Buring has seen many retailers decide it was time to get back in the game and open up more stores.
“We are seeing increased demand, but there is no supply,” Buring said. “The problem is no one has built any new centers in the past five to six years. We are starting to see some new site plans floating around, and we are working on some new projects. It’s a good time to own real estate right now, but even in the best areas it will be awhile before we bounce back to peak rents.”
Some projects that stalled when the recession hit are now being jump-started as the economy improves. One example is the Target Center in Olive Branch.
“Target went in five years ago and they had room for four or five boxes to go next door to them, but the recession hit and Target sat out there by itself for more than two years,” Buring said. “Now other retailers have opened up in those spaces, and they are doing great.”