VOL. 129 | NO. 215 | Tuesday, November 4, 2014
Midtown Success Highlights Commercial Real Estate Growth
By Amos Maki
Loeb Properties Inc. plans to build on the momentum it has created at Overton Square while turning its attention to other parts of Midtown.
The company, which saved the moribund Midtown entertainment district with an ambitious redevelopment plan, would like to see additional retail there and throw some residential development into the mix.
After already pumping millions of dollars into Overton Square, Loeb Properties is considering a small condominium development on Diana Street and a new retail development at the northwest corner of Diana and Union Avenue.
Robert Loeb, president of Loeb Properties, is bullish on Midtown, from the Sears Crosstown area to the Cooper-Young Historic District and Broad Avenue.
“I’ve always tried to put Overton Square in the broader context of Midtown,” said Loeb. “There’s a lot of momentum, a lot of investment in Midtown and investment activity begets more investment activity.”
Midtown and other developments in commercial real estate will be the subject of discussion Thursday, Nov. 6, during the 2014 Commercial Real Estate Review & Forecast, part of The Daily News’ 2014 Seminar Series.
The seminar, which will be held at 3:30 p.m. at the Memphis Brooks Museum of Art, will feature an overview of local and national commercial real estate trends in the office, industrial, retail and multifamily sectors.
Loeb is the keynote speaker at the event. The panelists are Hank Martin, vice president of NAI Saig Co.; Steve Guinn, vice president of Highwoods Properties; Steve Woodyard, president of Woodyard Realty; and Shawn Massey, partner with The Shopping Center Group LLC.
At the northwest corner of Cooper Street and Central Avenue, Loeb said the company recently approved the latest design plan for Taylor Berger’s Truck Stop project.
And Loeb Properties owns around 10 acres of warehouse space along the northern side of Broad Avenue that it hopes to begin working on soon.
“We’re thinking the momentum on Broad jumps to the north side of the road and we’ve got some very good adaptive reuse prospects in the recreation and fitness sectors,” said Loeb.
On the retail front, restaurants and grocery store activity has been high, Massey said.
Sprouts Farmers Market, a grocery chain new to the Memphis area, is opening its first two stores in the Memphis area, one in Germantown and another in Lakeland. Earlier this year, Whole Foods expanded and remodeled its Poplar Avenue store in East Memphis and is building a new Germantown store, and The Fresh Market opened a new location in Midtown. In addition, Kroger is investing millions into its local stores.
The office market has produced a decent year so far, but room for improvement remains.
One of the largest trends in the 2014 office was the retrenchment of FedEx, which has been moving employees out of leased space and into company-owned space.
Another trend is tenants and investors looking at Class B buildings just off the highly coveted Poplar Avenue corridor in East Memphis.
The vacancy rate for Class A space in East Memphis ended the third quarter at 2.9 percent, according to CBRE Memphis. East Memphis saw 68,918 square feet of Class B absorption in the third quarter, by far the most in any submarket. The top three office leases in the third quarter all occurred in Class B buildings just off the Poplar Avenue corridor, according to Cushman & Wakefield/ Commercial Advisors.
The industrial sector has experienced a pretty healthy rebound.
Net absorption for the third quarter was 904,499 square feet – the fifth consecutive quarter for positive absorption – and the vacancy rate dipped to 10.1 percent, according to CBRE Memphis. The Memphis market has experienced around 2.7 million square feet of absorption through the first nine months of the year, just shy of last year’s 3.2 million-square-foot total for the entire year.
Fundamentals in the multifamily sector of Memphis remain strong and are improving in most areas, with rents, occupancy and absorption all up overall.
On the investment side, around $338 million in transactions closed through the end of October, far above the 2013 year-end total of $277 million.
“Over the next few years inventory for sale will start becoming harder to find and prices are starting to move up,” said Woodyard.