VOL. 118 | NO. 135 | Wednesday, July 28, 2004
Commercial Sales Rise, Prices Skyrocket
Most market sectors show improvement from 2003
The Daily News
Anyone seeking signs of economic recovery could look no
further than the commercial real estate market in Metro Memphis. Although some
areas have been slower to recover than others, overall sales have increased
while prices have skyrocketed.
The number of sales of both improved
property and vacant land during the second quarter increased by 11.95 percent
to 384, according to data published by Chandler Reports. There were 343
transactions during the same period in 2003.
The market is looking pretty firm, said Martin Edwards, a partner
with Colliers Wilkinson Snowden. I would say its brisk.
Jolt in prices. Brisk might be an understatement, at
least as it relates to prices. While sales were up, total price paid for
commercial properties in the quarter shot through the roof.
During the second quarter, total sales volume for improved
and vacant commercial properties increased by 59.11 percent over the same
period last year to $255.1 million. Second quarter 2003 saw total volume of $160.3
million. Average price increased 42.12 percent to $664,266 from $467,397 during
second quarter 2003.
We see a significant pickup in activity in all areas, said
Irvin Skopp, vice president and director of asset
management with Belz Enterprises. Obviously, youve got better rates on your
newer properties, but I think all the activity based on market rates, theyre
all getting better.
Strong showing. Frank
Dyer III, senior vice president with Loeb Properties, is pleased with the
Weve encountered pretty strong markets this year, particularly
in retail, he said. Weve had strong call volume and strong showings. Office
is a little better than in the past, and our industrial seems to be improving,
By location. Of
course, success hasnt been met in every Memphis locale, although several segments
of Metro Memphis have seen improvement. Average price for commercial
properties went up in 18 Memphis-area ZIP codes during the second quarter.
The way our business works is youre always better off with
the best location, said Mark Halperin, executive
vice president at Boyle Investment Co. Overall, (office) vacancy is spread out
pretty consistently throughout the marketplace. There may be some pockets in
one place or another that might be a little bit better or worse.
The 38120 ZIP code saw the highest average price during the second
quarter, at $7.4 million for four properties. That compares to $5.4 million for
five properties in the same period last year.
Cordovas 38018 ZIP saw a strong improvement in price, as
five properties averaging 10,597 square feet garnered an average price of $2.5
million in the second quarter. That compared to six properties averaging 23,084
square feet in size and $570,361 in price during the same period last year,
according to Chandler Reports, which is owned by The Daily News Publishing Co.
Mixed markets. Edwards
said investors are interested in every sector in the Memphis market, from
industrial to multifamily. He said there are several land opportunities in the
I had some people in all week from Chicago looking at investment
property, he said. I think there is a healthy amount. From an investment land
standpoint, you have to get out for things to happen. The 269 loop and all that
activity on the other side of Collierville are going to stir up a lot of action
for a long time.
As for office space, the market is beginning to show signs
of life, but it has been behind the overall pace for commercial property.
The market in general, I would say its pretty slow, Halperin said. Things have picked up a little bit. Most of
the high-end products are in pretty good shape.
Reason for optimism. But
that doesnt mean Class A space is the only area with potential.
The weakness was in the B class and the C class buildings,
but as of late, weve seen more interest in B and C, Halperin
said. That is encouraging to me.
Kelly Truitt, executive vice president at CB Richard Ellis,
said while office activity has increased, hes concerned that the market is
losing a foothold in the corporate arena.
There are concerns weve lost some of our national and
regional headquarter-type folks, he said. Some large, some small but we
dont like losing any of them.
But we have seen some inquiries from some out-of-town
Time of year. With a
national election approaching, this time of year is typically seen as slow. But
it seems investors arent concerned.
For an election year, its pretty good, Edwards said. Election
years are questionable sometimes. People will be more worried, but it seems the
job market is holding pretty well. I think the strength of the continuation of
a non-volatile interest market has probably helped the real estate industry.
Cary Whitehead, senior vice president at Boyle Investment
Co., said retail activity has been moderate, but it should improve soon.
I think it will stay like it is until after the election,
he said. Everyone is wondering who is going to win and what impact it will have