SOUTHEAST SNAPSHOT, SEPTEMBER 2006
Memphis, Tennessee Retail Market
The current trends in retail development in Memphis include a continued movement to the outskirts of the MSA and more thoughtful development designed around an anchor tenant or designed to target a specific niche. In recent years, Memphis has seen a great deal of unanchored development fueled by inexpensive land and low interest rates. With the increase in supply of these developments, coupled with increases in both land prices and interest rates, developers are wisely planning developments with an eye towards differentiating themselves.
Memphis has seen four significant retail developments recently. Carriage Crossing opened in fall 2005 in Collierville. This lifestyle center pushes retail momentum to the far eastern portions of Shelby County and it also includes the first Parisian in the Memphis area. Southaven Towne Center recently opened in Southaven, Mississippi, a suburb of Memphis, and it brings department stores to Southaven for the first time. Future retail developments include Stonecreek Centre, an upscale center that has a striking design and is scheduled to be delivered in early 2007. It will bring more high-end boutique retail and restaurants to Germantown. Also scheduled for early 2007, Countrywood Crossing will bring more big box development to the Germantown Parkway corridor. Overall, retail development in Memphis is being pushed to the suburbs as the population continues to shift to those areas.
As retail development continues in the Memphis area, some of the more active retail developers in the region include Michael Lightman; Belz; Price Ford; Chamberlain, McCreery, and Rice; Desco; and Stonecrest Advisors; Loeb Properties; and Silk and Stewart Development. New retailers that are filling those developers’ stores include Parisian, Cost Plus World Market, Gordman’s, AC Moore, Carrabba’s, and Cheeseburger Cheeseburger, Costa Vista, Golf Discount, Golf Galaxy and Capel Rugs.
Gordman’s has recently leased retail space in three separate locations on Winchester Road, Germantown Parkway and one in Southaven. Other major leases of recent note include Best Buy, which leased approximately 45,000 square feet on Winchester Road; and Sportsman’s Warehouse, which leased approximately 50,000 square feet in two locations on Winchester Road and on Airways Road in Southaven.
Currently, the Memphis MSA’s retail vacancy rate stands at 8.6 percent. Rental rates have risen in Memphis due to supply having a difficult time keeping up with demand. At the end of the first quarter, rental rates stood at $11.86 per square foot, which was higher than 1 year ago.
As Memphis looks to its retail future, two submarkets should play a key role. Olive Branch has started to be recognized as a strong market unto itself as opposed to an afterthought to Southaven. Meanwhile, further development may occur in the shadows of Carriage Crossing in Collierville. All indications are positive for developers as the demand for retail space in Memphis continues to grow and as other household retailers look to expand their presence into the Memphis market.
— Scott Barton is vice president of retail brokerage services for CB Richard Ellis in Memphis, Tennessee.
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