VOL. 109 | NO. 57 | Tuesday, December 26, 1995
12/26 Real analys
Real Estate: Mavens Muse Selected Markets, Predict For 96
Contrarians seem to be as rare as leisure suits and eight-track tape players as the Memphis real estate market winds up 95 petal-to-the-metal in the residential and distribution sectors.
Demand for both new and existing products remains strong, to say the least. By the end of November, the Memphis Area Association of Realtors reported that 10,475 homes already had sold through the Multiple Listing Service.
This number far surpasses last years record sales levels. Prospects for 1996 look every bit as strong, according to Albert Santi of Signet Mortgage.
Santi says low rates will continue to fuel both construction and sales of existing product in the already red-hot residential market.
"I look for 6 percent, 30-year, fixed-rate money early in 96," Santi said. "Trust me, its a shoo-in."
Construction of new units, spurred by low interest rates and continued strong demand, is the biggest factor on the horizon of the multi-family sector, according to Kate Eidson, vice president of marketing with SPL/LEDIC.
1995 saw the construction of some 1,300 new units as the market "about absorbed everything that was built," Eidson said.
Eidson predicts construction of perhaps 2,000 new units, mainly in Cordova and Southeast Memphis, during the coming year, with no significant drop in the current overall average occupancy of 96 percent.
Eidson also predicted "a moderate increase in rents of 4 to 5 percent for 1996."
Typical of the year-end mood of local industrial real estate pros were the comments of Joel Fulmer, vice-president of Boyle Investment Co.
"We were shocked in 94 when we saw 7 million square feet of industrial space signed," Fulmer said. "And we were flabbergasted in 95 when the market exceeded 94. All I can say for 96 is that its fun to be on the product side of the industrial real estate business in times like these."
Dan Wilkinson, president of Wilkinson & Snowden Inc., seconded Fulmers sentiments, saying, "I foresee a lot of interest from major distributors. There are plenty of potential users of 300,000 square feet or more still out there looking at us (Memphis).
"Our biggest competitors right now are places like Kentucky, Ohio and Indiana. Fortunately for us, they face the same problem we do here right now a critically low pool of qualified labor. Thats the only factor I see right now that could limit our growth, near term."
A county-wide inventory of distribution space now at various stages of completion should be sufficient to keep new tenants coming to Memphis, at least through mid-year, in the view of Edward Saig, president of Saig Co. of Tennessee.
Like Fulmer and Wilkinson, Saig sees the endemic labor shortage as an eventual impediment to continued growth, adding that in years to come, a failure of local government to provide extended infrastructure, such as sewers, may also be a factor. "Meanwhile, I expect to work in 96 as hard as Ive ever worked in my life, just to keep up," Saig said.