VOL. 131 | NO. 109 | Wednesday, June 1, 2016
MAA Still Entertaining Headquarters Options
By Madeline Faber
Memphis-based MAA is a year into its search for a new headquarters, and the company is moving closer to plans for a newly constructed building.
The real estate investment trust, which focuses on multifamily properties, first announced the move last summer. MAA is currently housed in nearly 43,000 square feet at 6584 Poplar Ave. in East Memphis. It is looking for an 80,000-square-foot space, with room to grow, to house its 200 local employees.
Since MAA announced its search, ServiceMaster and Evergreen Packaging have also entered the ring as large office users looking for Class A space in Memphis.
“The A market is tight, but the A market for an 80,000-square-foot tenant has been tight for the last five to seven years,” said Larry Jensen, president and CEO with Cushman & Wakefield/Commercial Advisors, the real estate firm tasked with finding MAA its new home. “Five to seven years ago, there were probably two to three existing options, and you had to likely look at building something.”
Eric Bolton, CEO and chairman of MAA, said the existing office market and his vision for an open-floor plan point toward the need for a ground-up, multi-tenant office building.
Triad III, which Highwoods Properties completed in 2010, is the newest multi-tenant office building in the East submarket. It only has 4,000 square feet of vacancy. Many older, existing buildings have oddly shaped floor plates and tight columns that prohibit the collaborative floor plan that defines a contemporary corporate headquarters.
“The fact that we have growing needs for office space in the Memphis market that outstrip the capacity for the market is fundamentally a healthy sign,” Bolton said. “It creates a situation where you more than likely – considering that you’re going after a Class A option – that most of the options you consider have to be built. I think that’s certainly going to be the case from what we’re looking at.”
Bolton said he is in conversations with Highwoods Properties and Boyle Investment Co., among other developers, about MAA being a tenant in a new building. Both Highwoods and Boyle are looking to develop in the highly desired East submarket, but they have yet to formally announce new construction.
But MAA is not just focused on the Poplar-240 corridor. Bolton said he’s looking at locations from Downtown to Collierville for the new headquarters. Commercial Advisors has whittled the possible locations for a headquarters to five to seven sites, which is down from 31 locations last year.
When MAA does decide on a location, it’s there to stay. Bolton said he was considering moving the headquarters outside of Memphis, possibly to Atlanta or Dallas, but he decided to stay in Memphis because of the company’s strong roots here. He wants the next iteration of the company to be in a location that can encourage growth for the next generation.
“Generally what happens is these are generational moves,” Jensen said. “Especially when you’re relocating 200 people, and they’ve been where they are for the past 25 or 30 years. This is not a five-year lease. This is getting it right on the front end.”
If MAA takes space in a multi-tenant building, it will have room to grow, Jensen said. MAA could be limited if it opted for a traditional built-to-suit, because growth is in the cards for the company, which acquired rival Colonial Properties Trust in 2013.
Jensen said ServiceMaster and Evergreen Packaging’s concurrent searches aren’t having a dramatic effect on MAA’s search for headquarters space. He said Memphis sees two or three big users searching the market each year. However, ServiceMaster, which is seeking around 275,000 square feet of space, is an anomaly because of its size.
“Recognizing there are some other tenants in the market, I think with the kind of company that this is, we’d (MAA) be very attractive for somebody to live with,” Jensen said.
With several big users looking for space and limited Class A availability, many developers are eager to add a new building to the market.
“I promise you if one of our four or five locations we’re going to build were to go away, there are another four to five behind it,” Jensen said.
Bolton is continuing to evaluate MAA’s headquarters’ needs and plans to be closer to a decision about the move by late summer or early fall.