VOL. 10 | NO. 50 | Saturday, December 9, 2017
EMPHASIS: Regional Business
Piece by Piece: Construction Projects Flourishing Throughout Mid-South
By Patrick Lantrip
With $11 billion spread out among more than 300 active projects in the Memphis area, according to data from brokerage firm Cushman & Wakefield/Commercial Advisors, it’s safe to say business in the region is good.
While Memphis proper still remains the epicenter for new developments, each area of the Mid-South brings something to the table that helps the region as a whole flourish.
Serving as the anchor for the region, Memphis set the tone in 2017 with a number of massive projects either getting underway or coming to fruition. Those include the grand opening of the $200 million mixed-use Crosstown Concourse, which served as the largest office delivery in Memphis since Clark Tower, and Amazon’s $72 million receive center in Southeast Memphis, which will create 600 jobs in the area.
Arkansas officials shovel dirt at the Oct. 5 groundbreaking for a new intermodal facility at the Port of West Memphis. The new facility will open up 2,000 acres of greenfields around the port for development. (Memphis News/Houston Cofield)
Infill development in the city’s core areas was one of the primary themes in 2017. One the most notable was Development Services Group’s $73 million plan for the former Wonder Bread factory and several surrounding buildings in the Memphis Medical District. The project is set to include 286 upscale multifamily units, a 480-space parking garage and 150,000 square feet of office and retail space.
The city’s push to create population density in the core areas manifested mainly in Midtown with a multitude of multifamily projects, including Makowsky Ringel Greenberg’s Overton Gateway project at the intersection of Sam Cooper Boulevard and East Parkway; Focal Point Investments’ 25-unit studio apartment complex at 999 S. Cooper St.; and 1544 Madison Partners 217-unit development at the corner of Madison Avenue and North Avalon Street.
However, the suburbs were well-represented as well, most notably with the $375 million Lake District development in Lakeland. Gilad Development Co., led by Yehuda Netanel, has begun demolishing the former Lakeland Factory Outlet Mall to make way for the 165-acre mixed-use project.
“We are committed to making the Lake District all that it can be,” said The Shopping Center Group partner Shawn Massey. “The retail environment is rapidly changing and we want make sure we are building for the future and not in the past. (Netanel) continues to double down on the project to bring it to fruition.”
Leaving Shelby County, the 4,100-acre Memphis Regional Megasite in Haywood County missed on a massive opportunity to land Toyota-Mazda’s $1.6 billion electric car plant earlier this fall.
On Nov. 13, Tennessee Economic and Community Development Commissioner Bob Rolfe confirmed the megasite was eliminated from consideration by Toyota-Mazda joint venture and a separate “undisclosed tenant” due to the fact the site is not "shovel-ready."
One of the project’s major holdups: hundreds of letters of opposition that have been submitted by West Tennessee residents over the site’s plans to discharge millions of wastewater directly into the Mississippi River north of Memphis.
Since purchasing the Haywood County megasite in 2009, the state of Tennessee has invested $140 million into it, and Gov. Bill Haslam has said it is his top economic development priority before he leaves office next year.
In terms of major economic development in North Mississippi, industrial is still king. That’s not to say the submarket’s residential and retail development aren’t doing well, but when it comes to square footage, the numbers speak for themselves.
At the end of the third quarter, more than 4.5 million square feet of industrial space was under construction in the region, with DeSoto County accounting for 80 percent of all activity, according to CBRE’s most recent Memphis Industrial MarketView Report.
Despite more than 3 million square feet of speculative space scheduled for completion by the first quarter of 2018, vacancy rates are expected to remain flat or even decrease over time because active users are searching for more than 15 million square feet of space in the Memphis area.
At the end of Q3, more than 4.2 million square feet of speculative space was under construction in the Memphis metropolitan statistical area, and all of it was in North Mississippi, with DeSoto County alone accounting for 3.7 million square feet.
The majority of this can be traced back to five developers – Core5 Industrial Partners, Hillwood Investment Properties, Panattoni Development Co., IDI Gazeley and Johnson Development Associates Inc. – all of which have projects topping 500,000 square feet in the works.
“DeSoto and Marshall County has seen a tremendous amount of construction activity since early fall,” said Andy Cates, Colliers International CEO and president of brokerage services. “All of this is driven by the lack of space in the entire Memphis metro market and demand from tenants.”
Notable North Mississippi deliveries in 2017 included Panattoni’s 615,600 square feet in Gateway Global Logistics Center in Marshall County, which was completely leased by McCormick & Co., and Hillwood’s 947,620 square feet in the DeSoto Trade Center, of which 517,000 square feet was leased by IT and consumer electronics distributor Synnex Corp. Both developments hit the market in the second quarter.
Earlier in the year, Hillwood also delivered two speculative buildings totaling roughly 360,000 square feet in Hacks Cross Logistics Center, which were leased to Kenco and Autoliv upon completion, and Prologis delivered a 716,080-square-foot build-to-suit warehouse at 8500 Nail Road for an undisclosed tenant during the first quarter.
Looking to capitalize on a $10.9 million federal transportation grant from the U.S. Department of Transportation’s TIGER IV (Transportation Investment Generating Economic Recovery) program to expand rail infrastructure at the Port of West Memphis and expand the International Rail Port Logistics Park, planning officials in West Memphis broke ground on a project in October that has the potential to serve as a catalyst for economic development in the area.
Upon completion, the new intermodal facility will open up 2,000 acres of rail-served greenfields for development around the port, which has the potential to create up to 3,000 jobs, development officials estimated at the Oct. 5 groundbreaking.
The new road-to-rail transload facility will be able to serve a wide variety of needs for manufacturers and logistics firms by connecting two major interstates, two Class 1 railroads and a deep-water Mississippi River port.
“This is one of the few locations in the country where this is possible – where all three modes are totally accessible and reliable,” West Memphis economic director Phillip Sorrell said at the time. “Whether fuel prices are high or river levels are low, shippers have multiple options regardless of conditions.”