VOL. 132 | NO. 221 | Tuesday, November 7, 2017
Memphis Flexes Its Strengths In Improving Real Estate Market
By Patrick Lantrip
The evolution of e-commerce and its transformative effects on the real estate market are not just limited to the retail sector, and while many trends and topics were discussed at The Daily News’ annual Commercial Real Estate Review & Forecast Seminar on Nov. 2, this was one of the overarching themes.
This year’s panelists included Phil Trenary, president and CEO of the Greater Memphis Chamber; Tom Hutton, vice president of Boyle Investment Co.; Tony Argiro, vice president of CBRE; Shane Soefker, principal with Avison Young; and Shawn Massey, partner with The Shopping Center Group.
As each speaker delivered sector-specific highlights and predictions, many cross-sector themes became apparent, including the movement toward mixed-use developments and the give and take between the industrial and retail sectors.
The Daily News’ Commercial Real Estate seminar attendees inside the Brooks Museum after a panel discussion. (Daily News/Houston Cofield)
“As jobs are possibly lost at brick-and-mortar (retail) stores, we are able to gain them on the distribution side at a higher wage,” Argiro said during his presentation on the industrial market. “While these retailers are shutting down, Memphis and our job market is also benefiting from that.”
Soefker also touched the effects of e-commerce when discussing recent conditions in commercial real estate investments.
“E-commerce has had a tremendous impact on the retail market,” Soefker said. “There have been 35 bankruptcies filed in 2017.”
However, both Soefker and Massey noted that the retail market is not nearly as bad as national headlines would make it seem.
“For every store that closes, 2.7 open up,” Massey said. “Sixteen chain stores accounted for 48.5 percent of the store closings; five of those accounted for 28 percent.”
This, Massey concluded, was an example of evolution, not extinction.
“Retail is always transforming,” he said. “We went from malls in the 1960s and 1970s, to big-box retail in the 1980s.”
Tony Argiro speaks with a colleague at The Daily News’ Commercial Real Estate seminar at the Brooks Museum. (Daily News/Houston Cofield)
Those bankruptcies were examples of retail companies that were unable or unwilling to evolve to meet the changing needs of consumers, Massey said, not a harbinger that in-store retail shopping faces extinction.
While the office market in Memphis has not benefited from e-commerce as much as other sectors, that could drastically change if Amazon, the poster child of e-commerce, chooses Memphis for its coveted second headquarters.
“We at Boyle remain high on Memphis and are optimistic about its future,” Hutton said during his office market presentation. “Hopefully, Amazon will agree.”
Hutton said 2017 has been marked by several very large office deals, from the transformation of the former Peabody Place Mall into ServiceMaster Global Holdings’ new Memphis headquarters, to the infill of space vacated by ServiceMaster at Ridgeway Center by Memphis-based Thomas & Betts, an operation of global conglomerate ABB.
“With very few remaining developable sites, we foresee more redevelopment in the near future, particularity in the Downtown and East Memphis submarkets,” Hutton said of office market trends locally.
Trenary’s presentation, which was about the city’s pitch to land Amazon’s aforementioned second U.S. headquarters, also highlighted the effects that its new receive center in Memphis will have on the city. Amazon choosing Memphis for the logistics operation was a reminder of just how much is at stake when courting new business.
“Mississippi is kicking our rear,” he said. “We’ve lost 22,000 jobs to Mississippi, almost $1 billion in investment and 36 companies.”
He said that when McKesson Corp. alone relocated south of the state line, it cost the state between $8 million and $20 million.
Trenary said the upcoming gubernatorial race is important to Memphis’ future.
“When you have the opportunity to meet (the candidates), tell them: ‘I’d love to have you as governor, but what are you going to do for us?”