Local Real Estate Sectors Show Positive Absorption

Vacancy in the Memphis MSA industrial market has hit a five-year low as 3.5 million square feet of space has been absorbed so far this year, according to the latest MarketView Report from CBRE.

In the third quarter, the Memphis MSA saw 843,827 square feet of positive net absorption, down about 27 percent from the previous quarter.

While absorption was lower quarter to quarter, the low vacancy and construction activity are signs of a very healthy market, according to Jim Mercer, senior vice president with with CBRE’s Industrial & Logistics Services. Low vacancy, along with increasing rental rates, has convinced developers the time is right to build speculative space.

“Marshall County and DeSoto County in Mississippi are submarkets where investors will continue to pursue acquisitions because of the strong absorption and development volume,” Mercer said. “The 5 million square feet under construction in our region is located within Marshall and DeSoto counties. Those elevated numbers can’t help but catch the attention of investors.”

A little more than 5 million square feet of industrial product is currently under construction, according to the CBRE report. The biggest deal of the third quarter was an 800,000-square-foot lease signed by Sears.

In the Memphis MSA office market, net positive absorption totaled 55,200 square feet, the most absorption in a quarter this year, according to CBRE. Year-to-date, the office market has seen 33,184 square feet of net absorption.

Class A office vacancy decreased in the third quarter, leaving less than 1 million square feet of Class A space available, the CBRE report said.

As parking availability dwindles in Memphis and across the country, there is a trend toward exploring more public transit options and developers are having to consider denser parking space plans.

“The commuter culture of Memphis relies heavily on individual vehicles, rather than mass transit, and this has caused parking ratios to become more significant when marketing properties and determining tenant compatibility,” said Ron Kastner, senior vice president with CBRE Advisory & Transaction Services/Investor Leasing. “This is a trend which appears to be here to stay, so some creative solutions will need to develop in order for Memphis to continue having a healthy office market.”

Among the third-quarter highlights for the local office market, Crosstown Concourse is expected to add 552,258 square feet to the Midtown submarket when its transformation is completed and Class A vacancy continues to shrink. In the premier East Memphis office submarket, vacancy is at a low of 3.6 percent.

The Memphis MSA retail market also recorded net positive absorption in the third quarter of 95,184 square feet. Total vacancy in the retail market stood at 11.6 percent at quarter’s end, a five-year low, according to CBRE’s latest MarketView Report.

The overriding trend in the local retail market is construction – estimates show that 745,500 square feet of retail space is under construction and about 473,500 square feet will be delivered by the close of the first quarter 2017.

“The upcoming deliveries of Ikea and Crosstown Concourse are significant for the retail market and the overall economy of the Mid-South,” Parrish Taylor, vice president with CBRE’s Retail Investor and Occupier Services, said. “The opening of these developments, as well as the other recent projects like Bass Pro Shops at the Pyramid and Tanger Outlets in Southaven, continue revitalizing the market.”

Collierville is probably the hottest submarket, outpacing the East and Germantown submarkets – combined – in leasing activity in the third quarter, the report notes.

– Daily News staff

GTx Reports $6.9 Million Loss in Third Quarter

Memphis-based biopharmaceutical company GTx Inc. swung to a loss for the third quarter compared to the year-ago period, the company reported this week.

GTx posted a net loss of $6.9 million for the quarter ended Sept. 30, compared to net income of $34.9 million for the same period in 2015. Research and development expenses for the quarter were $4.6 million compared to $3.8 million for the same period in 2015, and general and administrative expenses were $2.3 million for the quarter, up from $2 million in Q3 2015.

In October, the company completed a registered direct offering of 17.3 million shares of its common stock that brought in almost $14 million in net proceeds.

Investors in the offering consisted of some existing shareholders, including Pitt Hyde, its largest shareholder and lead director of the board of directors; Robert Wills, the board’s executive chairman; and Marc Hanover, CEO and board member.

– Andy Meek

No Criminal Charges In Bratcher Police Shooting

The Shelby County district attorney general’s office will not pursue criminal charges against Memphis police officers who shot and killed Jonathon Bratcher this past January in South Memphis.

District Attorney General Amy Weirich announced the decision Wednesday, Nov. 2, after her office reviewed a Tennessee Bureau of Investigation report on the incident.

The report is not open to the public by state law, and Weirich said because of that she can’t comment on the specific conclusions of the report. She cited “the totality of circumstances” in her decision not to charge the officers or seek a grand jury indictment in the case.

“I believe a jury would find that the officers had lawful justification to fire their weapons at the suspect in self defense, in the defense of others and in order to affect an arrest,” Weirich said in a written statement.

As Weirich announced her decision Wednesday, she also filed a petition in Chancery Court seeking the public release of the report as she did for the release of the TBI report into the July 2015 police shooting of Darrius Stewart.

Bratcher was shot and killed by police near Mississippi Boulevard and South Parkway East on Jan. 27 after he bailed out of a car being pursued by police on traffic charges.

– Bill Dries

Laurelwood to Renovate, Add Two Retail Tenants

Laurelwood Shopping Center will undergo a $1 million renovation and is bringing in two new tenants, a local fine gifts retailer and a New York-based clothier.

The renovation will come in early 2017 and provide a “cleaner, more contemporary scheme” that will include new, angular awnings and European stone on the columns for texture, according to the center.

Laurelwood also will add Babcock Gifts and J. McLaughlin to its tenant mix.

Babcock Gifts is a well-known family businesses in Memphis and consistently rated one of the best gift stores in the city. Named as one of USA Today’s 10 Best, Babcock was described as “a Memphis go-to for fine gifts." It offers china, silver and crystal, but its product mix goes beyond bridal. Babcock will open in Laurelwood in January at 4538 Poplar Ave., next to Baer’s Den.

J. McLaughlin, a New York-based retailer of women’s and men’s clothing, follows basic concepts for customers: classic clothes with current relevance, sold in a friendly environment that has a neighborhood feel. It will be a new-to-market retailer in Memphis.

J. McLaughlin, which has more than 100 stores in the U.S., plans to be an active member of the community, following its business approach to being a good neighbor. Its addition will add to the impressive list of fashion retailers already operating in Laurelwood. J McLaughlin will open in spring 2017 at 4554 Poplar Ave., next to Dinstuhl’s.

John Reed and Danny Buring with The Shopping Center Group handled the lease negotiations.

– Daily News staff

First South to Open New Collierville Branch

First South Financial Credit Union has announced a 3,950-square-foot Collierville branch opening at 369 S. Byhalia Road.

That location will be the 16th for the credit union, which serves more than 50,000 members and is the largest in West Tennessee based on capital.The new branch features four drive-up teller stations and a drive-up ATM. Lobby hours are Monday through Friday from 9 a.m. to 6 p.m. and Saturday from 9 a.m. to 3 p.m., and drive-up hours are Monday through Friday from 8 a.m. to 6 p.m. and Saturday from 9 a.m. to 3 p.m.

– Andy Meek

Memphis in May Accepting Barbecue Applications

Memphis in May International Festival is now taking applications for the 40th annual World Championship Barbecue Cooking Contest, scheduled for May 17-20 in Tom Lee Park.

The 2017 event marks the first year the competition has stretched into four days. It also features the largest prize purse in the history of the championship, with a total of $117,150 in prize money. All competition categories will see higher prize payouts.

Festival organizers are projecting another maximum-capacity competition, with more than 300 judges scoring the 250-plus barbecue teams competing in categories such as whole hog, ribs, shoulder and patio porkers, plus 12 ancillary contests. Those judges include more than 90 who are set to be trained at a sold-out judging seminar this month.

“This is a significant anniversary for the World Championship Barbecue Cooking Contest,” James L. Holt, president and CEO of Memphis in May, said in a statement. “Our judging seminar sold out in record time and we expect the same for the 40th anniversary contest.”

The contest routinely draws teams from across the country and around the world, and this year’s competition will include at least one team from the 2017 Memphis in May honored country, Colombia. Applications are availabe at memphisinmay.org/wcbcc-teams, with an application deadline of Feb. 19.

Memphis in May kicks off with the Beale Street Music Festival on May 5-7. Other events include the International Salute to Colombia (May 8-14), 901Fest (May 27) and the Great American River Run (May 28).

– Daily News staff

Tenn. Legislative Candidates Pull in More Than $16M

More than $16 million in political contributions has flowed to candidates running for seats in the Tennessee General Assembly this year.

That total includes $1.5 million given to candidates in the final reporting period before next week’s general election.

Senate Majority Leader Mark Norris, a Collierville Republican with no Democratic opponent this year, has quietly led the way with more than $655,000 in receipts so far.

Norris is among several potential gubernatorial candidates to succeed term-limited Gov. Bill Haslam in 2018. Others include Republican Sen. Mark Green of Clarksville and House Speaker Beth Harwell of Nashville. Each has raised about $515,000.

Republican Sen. Steve Dickerson has brought in $625,000 for his race against Democrat Erin Coleman in his closely divided Nashville District. About $120,000 of that amount has come in the form of direct and in-kind contributions from the Senate Republican Caucus, which has spent another $669,000 on anti-Coleman advertising in October alone.

Coleman campaign received some free publicity on Wednesday when she was endorsed by President Barack Obama.

The top 12 recipients are Republicans, combining for more than $5.3 million in donations.

Democrat Gloria Johnson has received about $233,000 for her bid to reclaim the Knoxville seat she lost to Republican Rep. Eddie Smith two years ago.

The Tennessee Relators PAC has been the top donor to Statehouse candidates, giving a total of $258,000. The next highest contributor was the Senate Republican Caucus with $233,000, followed by the Tennessee Bankers Association PAC with $230,000 and $177,000 from the Wine & Spirits Wholesalers of Tennessee.

– The Associated Press

Baker Donelson to Merge With Ober/Kaler Law Firm

Baker Donelson is merging with national law firm Ober/Kaler effective Jan. 1, creating one of the 50 largest law firms in the country.

The combined company will retain the Baker Donelson name.

The merger with Ober/Kaler, headquartered in Baltimore, creates the third-largest health care practice.

The merger was approved by leaders and shareholders of both law firms and announced Monday, Oct. 31. The deal is expected to close on Jan. 1.

Memphis-based Baker Donelson traces its lineage back to 1888 when James F. Baker opened a law firm in Huntsville, Tennessee. The Memphis part of the law firm dates to 1911 when Walter Chandler began his private practice in Memphis.

Baker Donelson chairman and chief executive officer Ben C. Adams termed the merger “a significant step” in the firm’s strategic growth.

“This is a great cultural fit as well, with our firms’ shared commitments to our clients, diversity, pro bono service and community involvement,” Adams said in a written statement.

Ober/Kaler CEO S. Craig Holden highlighted the merger in the health care, financial services and construction practices.

“We were drawn to Baker Donelson’s outstanding reputation and the chance to offer our clients a significantly expanded platform with a broader reach, both geographically and in terms of the range of legal counsel that a firm of more than 800 attorneys and advisers brings,” Holden said in a written statement.

Baker Donelson currently has 700 attorneys and advisers across 30 practice areas and 21 offices in eight states and the District of Columbia as well as London.

Ober/Kaler has 110 attorneys and three offices in Baltimore, Falls Church, Virginia, and Washington, D.C.

– Bill Dries

U of M Offers Shuttles For Men’s Basketball Games

The University of Memphis athletic department will provide shuttle service to home men’s basketball games. The Tigers have teamed up with Blues City Tours to provide shuttle service from various locations in the Memphis area to all 19 men’s basketball games at FedExForum.

Round-trip shuttle service costs $10 per game. Departure times for the FedExForum are listed from each pick-up location and the return shuttles will leave 30 minutes following the end of each home game. Shuttles start with the exhibition game on Monday, Nov. 7.

• Germantown Plaza, 7781 Farmington Blvd. at Exeter Road: 1 hour, 30 minutes

• Germantown Kroger, 6660 Poplar Ave. at Kirby Road: 1 hour, 15 minutes

• Halle Stadium, 2616 Mt. Moriah Road: 1 hour, 15 minutes

• Laurelwood Shopping Center: 1 hour

• Bartlett/Wolfchase Wal-Mart, 8400 U.S. 64: 1 hour, 15 minutes

– Don Wade

State Leaders Break Ground On Solar Welcome Center

The Tennessee Departments of Transportation and Tourist Development held a groundbreaking ceremony Monday, Oct. 31, for the new I-40 Solar Farm Information and Welcome Center in Haywood County.

Tourism Development Commissioner Kevin Triplett, Haywood County Mayor Franklin Smith III, Strata G vice president Elliot Barnett and TDOT Region 4 regional director Jason Baker provided remarks.

The I-40 Information and Welcome Center is to be located on the West Tennessee Solar Farm and features a modern, energy-efficient design. The center plans to feature Spectrum, an educational exhibit about the benefits of renewable energy and solar power in Tennessee.

The West Tennessee Solar Farm is owned and operated by the University of Tennessee. It opened in 2012 as part of the Volunteer State Solar Initiative. The facility is one of the largest public displays of solar energy in the southeast and is capable of generating five megawatts of electricity, powering 500 homes annually.

“The I-40 Haywood County Information and Welcome Center offers a unique opportunity to visitors,” Triplett said in a statement. “We appreciate the opportunity to showcase how West Tennessee and the state are striving to harness the use of natural resources in a positive environment.”

The I-40 Solar Farm Information and Welcome Center is located at mile marker 44 westbound and is expected to open to the public in late 2017. Currently, Tennessee has 14 welcome centers, all constructed by TDOT and operated by Tourist Development.

– Daily News staff

Malco Prepares to Renovate Wolfchase Galleria Cinema

Malco’s Wolfchase Galleria cinema is set to undergo what it’s calling an “extensive renovation.”

The project is expected to begin in January. The renovations will include improved sound systems, upgraded auditorium seats, new restrooms, an updated lobby, enhanced concession stand with new menu items and fresh signage.

All work is set to be finished by March.

Malco had previously said it didn’t plan to renew its lease inside Wolfchase when it ends in 2017. However, a Malco spokeswoman said Monday the cinema is staying put there.

“We were able to negotiate a new lease with the mall that will allow us to remain in the mall, make renovations to the theater, and build the new theater along Highway 64 (west of Houston Levee Road) that is slated to open in summer 2018,” said Malco spokeswoman Karen Scott.

– Andy Meek

Car Lots Dominate City Council Agenda

The Memphis City Council votes Tuesday, Nov. 1, on three car lots, located at the intersection of Austin Peay Highway and Jones Road, and at 1720 E. Holmes Road and 2109 Chelsea Ave.

The council meets at 3:30 p.m. at City Hall, 125 N. Main St. Follow the meeting @tdnpols, www.twitter.com/tdnpols, and get updates from committee sessions during the council day.

The council will also consider converting a car lot at 4035 Summer Ave. into an insurance office development.

The owner of the lot, Latinos 901 Auto Sales, bought the property from Mostly Trucks, assuming that it was zoned for a car lot. But when Latinos 901 applied for a variance with the Board of Adjustment, it was rejected in May because the property has never had the proper zoning for a car lot.

Mostly Trucks relied on a 2005 zoning letter from the local Office of Construction Code Enforcement, which included an incorrect zoning district. And when Mostly Trucks sold to Latinos 901, it was with the documentation saying the site could be used for auto sales.

– Bill Dries

EdR Reports $3.5M Loss For Third Quarter

Memphis-based EdR recorded a net loss of $3.5 million, or 5 cents per share, in the third quarter, the real estate investment trust reported Oct. 31. That compares to a net loss of $4.7 million, or 10 cents per share, during the same period a year ago.

EdR, which is among the nation’s largest developers, owners and managers of collegiate housing, saw operating income drop to $1.2 million in the third quarter compared with $2.4 million in Q3 2015.

EdR’s same-community portfolio, which includes 48 properties comprising 27,537 beds, opened the 2016-2017 lease term 96.7 percent occupied, which still missed the lower end of EdR’s earlier guidance because of previously reported issues affecting leasing at two communities serving the universities of Missouri and Oklahoma. Leasing at its new-community portfolio opened the term 88.8 percent occupied, at the lower end of expectations.

Among other news from EdR this quarter, the company completed its acquisitions of two communities serving Colorado State University as well as a 38 percent interest in a community at the University of Arizona. The $80 million pending acquisition of a 700-bed community serving a tier-one university is still in process.

EdR delivered developments at three universities in 2016. Projects at six universities are on time for a scheduled delivery in 2017, with two more following in 2018.

“Our 2016-2017 leasing results exhibit continued strength across our markets, which along with the expectation that 2017 supply-and-demand dynamics will remain consistent with 2016, bodes well for next year,” said EdR CEO Randy Churchey in a written statement.

The company reaffirmed its 2016 guidance, including diluted earnings per share in the range of 77 cents to 80 cents.

– Daily News staff

MAA Q3 Earnings Reflect Merger Costs

Memphis-based Mid-America Apartment Communities Inc. reported third quarter net income of $84.3 million, down from the $91.7 million reported by the real estate investment trust a year ago.

The quarter that ended Sept. 30 included an agreement by MAA to buy Post Properties Inc. of Atlanta. MAA expects to close the transaction by Dec. 1. The third quarter results included a $3.9 million charge as part of the merger costs as well as $47.7 million in gains reflecting the sale of other real estate assets by MAA.

MAA chairman and CEO Eric Bolton noted that MAA’s performance was “at the top end of our prior guidance reflecting continued solid leasing conditions across the portfolio.”

– Bill Dries

International Paper Posts Earnings Gain in Q3

International Paper Co. posted net earnings for the third quarter of $312 million compared to $220 million a year ago.

The earnings report for the quarter ending Sept. 30 for the Memphis-headquartered corporation showed quarterly net sales of $5.3 billion compared to $5.7 billion a year ago.

IP executives attributed the drop to the company’s sale of its IP-Sun joint venture and its Asian corrugated packaging business as well as its Carolina coated bristols business.

IP chairman and CEO Mark Sutton told analysts and investors IP expects to close on its purchase of Weyerhaeuser’s pulp business in the fourth quarter. During the third quarter, IP started to implement North American containerboard and box price increases.

Sutton cited “strong cash generation” for the third quarter “despite an uneven global economy and rising input costs.”

– Bill Dries

Cordova Flex Development Sells for $6.3 Million

The Horizon Business Center, a flex warehouse development on the north side of Interstate 40 near Wolfchase Galleria, has sold for $6.3 million.

Three limited liability companies affiliated with Louisville, Colorado-based Real Capital Solutions bought the 23,750-square-foot building at 2525 Horizon Lake Drive and the 41,300-square-foot building at 2565 Horizon Lake Drive from MM Industrial Memphis LLC in an Oct. 25 warranty deed.

The seller had owned the properties since 2005.

Built in 1990, the two Class A flex warehouses sit on a combined 10.6 acres on the west side of Horizon Lake Drive, west of the Interstate 40 exit at Germantown Parkway.

The Shelby County Assessor’s combined 2016 appraisal of the properties is $6.5 million.

– Daily News staff