High-Dollar Deal Boosts Commercial Real Estate

By Eric Smith

Following what has become a pattern, the local commercial real estate market in September was salvaged by one large deal that offset an otherwise dreary month.

This time it was Resource Real Estate Inc. to the rescue. The Philadelphia-based company bought the Wyndridge Apartments for $9.5 million Sept. 29 and carried the weight for Shelby County’s commercial activity during the month.

Despite that mammoth deal – the county’s third highest all year – September turned in the second-lowest sales total of 2009.

Just 40 commercial properties traded hands last month, a 40 percent decline from 67 sales made in September 2008, although it was a 3 percent improvement from 39 sales in August, according to the latest data from real estate information company Chandler Reports, www.chandlerreports.com.

The past 12 months (October 2008 through September) have averaged 49 sales per month. During that period, only May, August and September slipped below the mark of 50 sales, while the high this year was April’s 57 sales.

Sales last month averaged $660,078, down 13 percent from $758,789 in September 2008 but up 17 percent from $563,925 in August. September’s total volume of $26.4 million was about half of September 2008’s $50.8 million but 20 percent better than August’s $22 million.

Large and small

The good news on the commercial side is out-of-town buyers continue shopping in Memphis sometimes even pulling the trigger on big deals.

Resource Real Estate not only spent nearly $10 million on the Wyndridge Apartments – which contains two parcels, 6206 Knight Arnold Road and 6277 Lake Arbor Drive – but it plans to renovate and reposition the low-occupancy property in hopes of bringing it back to life.

The second-biggest deal last month occurred Sept. 9 when Byhalia, Miss.-based Car Wash USA Express bought the car wash at 3736 Riverdale Road for $2.8 million. It is the company’s fifth area facility.

Next came a Mapco Express gas station portfolio that sold in separate deals for a combined $2.1 million. Locally owned BAR II LLC – whose principals are Bernard Farber, Anwar Aman and Robert Allen – bought the Mapco stations at 6859 U.S. 70 and 2980 Broad Ave. for $1.2 million.

Beruk Properties bought a Mapco at 4131 Airways Blvd. for $475,000, and Mohammad Sharrif and Hayat Khalil bought the Mapco at 1559 Lamar Ave. for $440,000.

Out-of-towners were part of the month’s fourth- and fifth-largest deals. Southeast Investments LLC of Slidell, La., made its first Memphis investment by spending $1.8 million on a 23,952-square-foot retail center at 6050 Air Line Road in Arlington.

And Memphis Medical Redevelopment Group LLC – whose owners include Memphis real estate professional Anna Martin and investors from San Diego – bought the nine-story Park Tower at 57 Somerville St. for $1.7 million. The group plans to upgrade the units and market them to university students and health care professionals.

Apartment life

Multifamily remains one of the most active sectors in the local commercial real estate market. And that type of property shared the lead for most commercial sales in September, with five. Apartment sales averaged $2.5 million.

Neighborhood single-tenant commercial buildings also saw five sales (averaging $97,000) as did vacant land over one acre (averaging $543,144).

Steve Woodyard of Woodyard Realty Corp. said the multifamily industry has been able to keep pace during the recession as out-of-town investors continue looking to Memphis and snatching up value-added apartments.

“Our main issue with closing transactions in today’s market is with finding the right lender for the deal, which we’ve been able to do so far,” he told The Daily News. “It’s not easy. You kind of have to know which direction to go and who wants what these days, but we can get ’em done.”

Blake Pera, senior vice president of CB Richard Ellis’ local multifamily division, agreed that apartments seem to be generating the most activity. When discussing the Resource Real Estate deal, which he brokered on behalf of the seller, Pera said the sizeable transaction definitely serves as a shot in the arm for the embattled commercial sector.

“We’re always bringing in new investors to the market that see the opportunity here, but certainly it’s a sizeable transaction in an environment nationally that is seeing a lot fewer sales than we’re accustomed to the last few years,” Pera said.

Midtown mint

The top ZIP code for number of sales in September was Midtown’s 38104 with five sales averaging $482,280 and totaling $2.4 million.

Hickory Hill North’s 38115 led the county in average sales amount ($4.2 million) and total sales volume ($12.5 million) thanks to the Wyndridge transaction.

Year to date, Shelby County has recorded 440 commercial sales, a 34 percent decrease from 671 sales during the same period of 2008. Sales this year have averaged $569,553, down 42 percent from $978,692, and have totaled $250.6 million, down 62 percent from $656.7 million in 2008.

The Oakhaven/Parkway Village ZIP code of 38118 notched the most sales this year with 35 transactions averaging $686,056 and totaling $24 million, also tops in the county. The highest average sales price has occurred in the Cordova North ZIP code 38016, which has notched six sales averaging $1.8 million and totaling $10.8 million.

Chandler Reports is a division of The Daily News Publishing Co.