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VOL. 123 | NO. 61 | Thursday, March 27, 2008

Tight Times in RE Market In Spite of High-Dollar Deal

By Eric Smith

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Even though StoneCrest Investors LLC just unloaded $55.2 million worth of Cordova real estate, the Round Rock, Texas-based development company remains committed to the area, company CEO Brad Smith said this week.

"We have several other opportunities in Memphis and we'll continue to stay involved in the Memphis market," said Smith, who along with company partner Greg Herman has worked in the city.

Those other opportunities include developments such as the StoneCreek Centre in Germantown and the Wedgewood Commons in Olive Branch, a pair of large, upscale retail centers.

StoneCrest isn't alone in its commitment to the area. The company's high-profile investments and high-dollar transactions signal a continuing interest in Memphis' commercial real estate from outside parties - such as the Inland Real Estate Exchange Corp., an entity of Oak Brook, Ill.-based real estate investment trust (REIT) Inland Real Estate Group of Companies Inc., which bought that Cordova portfolio from StoneCrest.

It's likely that more outside entities are poised to bring their investment money to town, said Danny Buring, managing partner of The Shopping Center Group.

"I think that the buyers with these kinds of cap rates are going to continue to be from out of town," Buring said.


Infusion needed

Maybe some outside capital is what Memphis needs in 2008. This month's mega sale notwithstanding, the year began slowly, according to the latest data from real estate information company Chandler Reports, www.chandlerreports.com.

February was particularly sluggish as foreclosures crept upward, commercial sales and lending volume both slid and the dollar amounts were shockingly low.

The county's top commercial seller in terms of dollar amount for February was 4100 Quest LLC, a local affiliate of South Carolina-based ScanSource Inc., which sold its warehouse for $6.3 million.

Meanwhile, there were 79 commercial sales in Shelby County for the month (made by 74 entities), a 15.1 percent decline from the 93 in February 2007 and a 27.5 percent decline from the 109 in January 2008.

Total sales in terms of dollar amount were only $44.6 million, a 79.7 percent decline from the $219.8 million in February 2007 and a 69.8 percent decline from the $147.6 million in January 2008.

And through the end of February, Shelby County had just 189 commercial sales, down 12.5 percent from the 216 through February 2007. Moreover, the total dollar amount has declined 71.7 percent, from $680.7 million for the first two months of 2007 to $192.8 million for the first two months of 2008.

The March numbers, bolstered by Inland's purchase, are sure to show signs of improvement. How long that lasts with the fears of a recession looming remains to be seen.

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 23 23 1,365
MORTGAGES 21 21 1,068
FORECLOSURE NOTICES 6 6 196
BUILDING PERMITS 117 117 3,173
BANKRUPTCIES 42 42 795
BUSINESS LICENSES 2 2 331
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0