After most recessions, real estate bounces back.

The $45 million sale of The Preserve at Forest Creek Apartments in Southeast Shelby County was the largest commercial transaction in 2011. Multifamily sales, which were up 14 percent from 2010, had the most revenue of any property type with 92 sales totaling $298 million. (Photo: Lance Murphey)

But the Great Recession has been notably different – long, deep and very prolonged.

That’s the message Dr. John Gnuschke, director of the Sparks Bureau of Business and Economic Research and co-director of the Center for Real Estate at the University of Memphis, delivered in December at the Urban Land Institute’s Real Estate Outlook for the Mid-South.

“Clearly, we’re in a period in which we’re in a struggle,” Gnuschke said. “We’ve lost 6 million or more jobs in the country during the recession – it’s going to take multiple years to recover. Real (gross domestic profit) is not going to grow very much in 2012. It’s not a recession forecast, praise the Lord, at least no time soon. But it’s weak growth.”

And amid the long grind, Memphis is not going to lead the nation out of a recession, Gnuschke said. In the last 10 years, this city has netted zero new jobs.

Despite the stagnant job market, 2011 tallied the most commercial sales since 2008. There were 726 sales in Shelby County last year, up 11 percent from 656 in 2010, according to real estate information company Chandler Reports, www.chandlerreports.com.

CRE sales averaged $1.1 million last year and totaled $799 million in sales volume, compared to 2010’s average sales price of $847,558 and total sales volume of $556 million. The county averaged 60 sales and $66.6 million per month in 2011.

The largest transaction of the year was the $45 million sale of the Preserve at Forest Creek Apartments in Southeast Shelby County in June. What’s more, multifamily sales improved 14 percent from 2010 and had the most revenue of any property type with 92 sales totaling $298 million.

2011 was the best year in the past decade for Fogelman Management Group in terms of operating results, said president Mark Fogelman. And to top it off, the Memphis-based firm is noticing a rapid decline in its turnover ratios, or the number of residents moving out each year.

“Even though we operate across the country, Memphis was one of our top markets anywhere,” Fogelman said. “The only things that could derail us would be if unemployment increases or the economy falls back into a recession and people stop spending money.”

This year is poised for continued multifamily growth because the lending markets – Fannie Mae and Freddie Mac – are very much in favor of the sector, said CB Richard Ellis Memphis executive vice president Johnny Lamberson.

Overall, 2011 was a better year for investment sales around the country than 2010, but that doesn’t mean the CRE landscape is on the upswing by any means.

“There are still a lot of people with problem assets,” Lamberson said. “The lending environment – although a little bit better – it’s still not great, which makes transactions difficult to get accomplished. I wouldn’t say that the landscape for buyers or sellers is any more aggressive this year than it was last year. The market fundamentals have really not changed a whole lot to prop up any values any different than they were last year. It’s going to take some real time before we start seeing any significant change in the investment property field.”

Bank sales accounted for only 7 percent of last year’s commercial sales with 50 totaling $51.8 million. The total number of commercial bank sales, however, was up 4 percent from 2010.

Lamberson said he anticipates more foreclosures on the horizon, based on when five- and 10-year loans are due from large purchases during 2005 to 2007.

A good example of that is Willow Lake Business Park and Corporate Park in Hickory Hill. The property sold back to the lender for $26 million in October following a foreclosure, proof that record-high vacancies and downward pressure on rental rates are even causing major players like Chicago-based HSA Commercial to feel the brunt of the crisis.

Memphis is seen by many investors as a secondary or tertiary market. While the city will face a slow climb, there will be the occasional large transaction, Lamberson said.

Case in point is Parkway Properties, a Jackson, Miss.-based REIT that has disposed of most of its Memphis portfolio – including the Renaissance Center; Falls Building; Forum I, II & III; and the Toyota Center – as part of a larger sale, and will likely shed its final Memphis asset, the Morgan Keegan Tower.

“The Parkway transaction is something unusual for its size and number of assets for Memphis to see,” Lamberson said. “These are large, $50 million plus deals. Those deals happen office-wise once every two years, maybe even once every three years.”

Industrial wise, Memphis can count on averaging one large transaction per year, Lamberson said. Sales were up 6 percent last year with 92 totaling $148 million.

In August, an entity of Dallas-based Mayfield Properties LP purchased a majority of Memphis Depot Business Park near Memphis International Airport for $35.8 million.

Jeb Fields, vice president of Cushman & Wakefield/Commercial Advisors LLC, expects sales to continue trending upward.

“There is a large amount of cash on the sidelines aggressively seeking quality product with quality tenants,” Fields said. “Additionally, owner-occupants are finding the combination of depressed pricing and loan terms are making purchases more attractive.”

Leasing activity has also picked up. In January, Trane U.S. Inc. finalized its 625,000-square-foot lease on Tradeport Drive in Southeast Memphis, and Kimberly-Clark signed a 556,000-square-foot lease in Southaven. And since there is a short supply of industrial spaces larger than 500,000 square feet, Fields expects a slight increase in rental rates in that range. For new construction to occur, Class A rental rates will need to increase 25 to 30 percent.

That being said, “it’s hard to pick a submarket other than the DeSoto submarket for the speculative comeback,” Fields said.

Also lagging in speculative construction is the office market, which has seen two new buildings in seven years, said Anthony Lopes, principal broker of Sperry Van Ness/Investec Realty Services. They are Boyle Investment Co.’s SunTrust Building and Highwood Properties’ Triad III, both near Poplar Avenue/Interstate 240.

But it took those buildings quite a long time to get filled, Lopes said, and that’s because of Memphis’ lack of white-collar jobs. And with the recent $930 million purchase of Morgan Keegan by St. Petersburg, Fla.-based Raymond James, the city could lose up to 600 back-office jobs if operations are consolidated.

“That’s potentially 150,000 square feet of office space,” Lopes said. “I hope that doesn’t happen, but it’s a very real possibility. That’s one way for Raymond James to recoup their investment, by cutting back in areas where they have a duplication of services.”

On a positive note, office sales were up 21 percent last year with 94 total, and smaller tenants are staging a comeback.

“We’re seeing some light at the end of the tunnel,” he said. “If you look back traditionally at these market cycles, we had this S&L (savings and loan) debacle that really hit hard in 2001, we built the first new building in 2007, so that was a six-year stretch. If you consider the market in 2007 is when it tanked, my projections are we’ll probably see some obvious improvement into late 2013.”

For the retail sector, Memphis should see activity before then, said Ed Thomas, vice president with Colliers International Memphis’ office and retail services.

Retail sales were up 25 percent last year from 2010 with 139 totaling $123 million. Topping 2011’s top retail sales were Belz Enterprises’ $14 million sale of Germantown Village Square to Boyle Investment Co., and the $11 million sale of the former Schnucks-anchored center at 7735 Farmington Blvd. to Kroger.

But not all of last year’s sales were at arm’s length. Other top retail sales included Cross Creek at Winchester and Riverdale roads – which sold for $12.7 million in foreclosure after selling for $57.5 million in 2005 – and Germantown Collection shopping center in Germantown for $7.3 million, which also underwent a foreclosure.

“While we haven’t seen the end of foreclosures, we are seeing investors coming in with the capital to maintain and grow occupancy as they acquire foreclosed retail properties,” Thomas said. “Creditworthy local entrepreneurs seem to be feeling more confident in jumping back into retail opportunities. We’re not out of the woods yet, but in 2012, particularly in the third and fourth quarters, we hope to see some more robust signs of recovery in the retail market.”

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