VOL. 8 | NO. 11 | Saturday, March 7, 2015
Wave of New Retail Construction Boosts Contractors
By Amos Maki
Retail development in the Memphis area is booming in what construction and retail officials describe as the most active period for retail construction since the recession, with everything from a massive outlet mall in Southaven to grocery stores and smaller, traditional retail centers going up.
“We’re seeing a lot of new retail construction and I think it’s just another sign of the economy getting stronger in general and of the dollars being spent,” said Rusty Linkous, president of Linkous Construction Co. “Retail is pretty strong right now.”
The list of projects under construction now or in the pipeline for 2015 is extensive.
Crown Centre LLC, an affiliate of Fogelman Investment Co., is developing a high-end, 29,373-square-foot retail center at 6450 Poplar Ave., part of a wave of new retail development sweeping across the Memphis area.
(The Shopping Center Group)
Tanger Factory Outlets Inc. and Poag Shopping Centers will break ground March 13 on a 300,000-square-foot destination outlet mall in Southaven. A company affiliated with Robert F. Fogelman II has begun construction of a 29,000-square-foot retail center at 6450 Poplar Ave. in East Memphis. Construction of a new 50,000-square-foot Kroger on Union Avenue in Midtown is underway.
Work on the Highland Row development near the University of Memphis, which was sidelined by the recession and now includes 32,000 square feet of retail space, will begin this year. The Shops of Saddle Creek is undergoing a renovation and 20,000-square-foot expansion. Ikea is expected to begin construction this year on its store near Interstate 40 and Germantown Parkway. In Olive Branch, Michael Lightman Realty Co. has launched a 31,000-square-foot retail center on Goodman Road.
“This is the longest list I’ve seen in a few years,” said Frank Dyer III of Loeb Realty Group.
The Memphis area is taking part in a broader national rebound in retail construction. Nearly 50 million square feet of retail space was delivered in the U.S. in 2014, the largest amount of retail development and redevelopment since 2010, according to research from Jones Lang LaSalle.
The retail building boom includes a mix of new ground-up construction and renovations to existing properties.
With the economy improving, developers and retailers are more willing to invest in new stores and retail centers. Meanwhile, owners of centers that survived the recession are now investing in the properties, seeking to take advantage of the improved retail climate while rebranding and repositioning the properties for the future.
“Shopping center owners and investors held off updating their centers during the downturn but now we’re finally seeing these assets getting capital allocated for renovations or expansion,” said Bill Moston, senior vice president of retail development for JLL, in a blog post.
Kroger is building a new supermarket on Union Avenue.
(Memphis News/Andrew J. Breig)
That’s what’s happening at Saddle Creek, where Texas-based Trademark Property Group is pumping millions into a renovation and expansion of the Germantown lifestyle center.
“Saddle Creek is a good example of an out-of-town developer realizing the value of coming in and developing in the Memphis area,” said Linkous, whose company is the general contractor on the Saddle Creek, Fogelman, Lightman and Midtown Kroger projects.
Others, like Fogelman, are taking advantage of the improving economy, increased confidence from retailers and other factors, like the pending completion of International Paper’s new office building next door to Fogelman’s site. He hopes to attract high-end retailers, restaurants and professional services firms to the development at 6450 Poplar in the heart of East Memphis.
“That submarket is very tight, there’s very high occupancy and rents have been growing over the last few years,” said Danny Buring of The Shopping Center Group LLC, which is handling leasing for the development. “Land in that area of town is almost impossible to come by and it’s a very tight market for that type of product.”