VOL. 132 | NO. 96 | Monday, May 15, 2017
Memphis Retail Market ‘Cautiously Optimistic’ Through First Quarter
By Patrick Lantrip
Despite some notable big-box bankruptcies, positive growth is still in the forecast for the rest of 2017, according to Cushman & Wakefield/Commercial Advisors’ first quarter Retail Marketbeat Report.
Memphis had a 9.8 percent direct vacancy rate, and though that number is slightly up year over year, longterm estimates indicate a that figure will steadily decline.
(Daily News File/Andrew J. Breig)
There was a 9.8 percent direct vacancy rate in Memphis through the first three months, and though that represents a 0.2 percent increase year over year, long-term estimates indicate the trend of a steady decline will continue.
“I think we’re cautiously optimistic moving forward with the retail growth in Memphis,” Carson Claybrook, CA/CW’s vice president of retail brokerage services said. “We’ve seen a lot of projects coming out of the ground and/or announced in the last 60 to 90 days.”
According to the report, consumer spending in the Memphis market started out slow, but gained momentum later in the quarter. Meanwhile, experts with the Federal Reserve Bank predict that job creation and wage growth in Memphis will continue to rise during the rest of 2017.
The submarkets with the lowest retail vacancy rates were North Mississippi at 3.2 percent, Cordova at 5.3 percent and the East submarket coming in at 5.5 percent.
“We’re seeing a rise in the rental rate go up to high levels due to the low vacancy in the Class A Market, especially in areas like Poplar and Union avenues,” Claybrook said.
Notable locations that came on the market during the first quarter included 61,000 square feet at the Trolley Station development that was previously occupied by Kids “R” Us and Toys “R” Us, 30,000 square feet at Carriage Crossing that used to house a Burke’s outlet, and the Booksellers at Laurelwood’s 22,000 square feet at Laurelwood Shopping Center.
Leasing activity was strong, with 418,000 square feet of lease transactions signed through the first three months. Those included Dave & Buster’s 43,000-square-foot deal in Cordova; Burlington Coat Factory’s 45,000-square-foot deal in North Mississippi; FFO Home’s 23,500-square-foot lease; and Planet Fitness’ 27,000-square-foot deal in the North Memphis submarket.
“Fitness users have been really active,” Claybrook said. “L.A. Fitness and Planet Fitness have been signing pretty large leases.”
The report said 540,000 square feet of new construction projects in the Memphis area will significantly increase inventory.
“Over the course of the year, absorption will be negatively affected as companies like HH Gregg and Gordmans close stores due to bankruptcies or downsizing,” Lauren Goddard, CW/CA’s senior research associate, concluded in the report. “However, pre-leasing activity at new sites has been strong and will help to negate the impact.”