Shawn Massey, CCIM, SCLS

On the Ground: Memphis, Tenn. by Steve Bergsman

Memphis, Tenn. Located, as it is, almost exactly in the center of the country, Memphis, Tenn., has traditionally been a distribution hub. And yet for retailers expanding nationally from warehouse centers in Atlanta, Chicago, Dallas and other key cities, Memphis is the last stop. “We are at the end of the retail string,” said Shawn Massey, a Memphis-based partner at The Shopping Center Group, a retail real estate services firm with headquarters in Atlanta. But over the past two years, retailers have been flowing into Memphis. Recently arrived big-box stores include HHGregg, Jo-Ann Fabric and Craft, and Staples. Other arrivals include fashion retailer Anthropologie and the Chipotle, Five Guys Burgers and Fries, and Wingstop restaurant chains. A Bass Pro Shop will be taking over the Pyramid Arena, downtown. Memphis is an older metro area with a population of some 1.3 million that is growing by about 1.5 percent annually. For the past decade suburban expansion has been moderate, with little of the shopping center overbuilding seen in other, booming cities. That was something of a problem, because expansion-driven retail chains had relatively few class-A locations to choose from during the mid-2000s. Then the recession hit, and vacancy rates quickly hit 15 percent. At least 30 big-box stores went vacant, says Massey. Over the past 18 months, though, roughly half of them have been taken. “Jo-Ann Fabrics and HHGregg came into town,” Massey said. “Planet Fitness took a location. Superlo Foods has backfilled two locations. Goodwill of Memphis has taken three or four boxes, Marshalls backfilled two spaces, and we even had some new box construction with HomeGoods and T.J.Maxx.” With all the activity, vacancies dropped to 14 percent in the third quarter, from 15 percent in the third quarter of 2010, according to commercial real estate data firm Xceligent. Another thing that happened was that a large group of retailers relocated some two miles eastward on Winchester Road. “It started with the vacancy of a large Kmart, then Best Buy left, followed by Babies ‘R’ Us, Kroger and LifeWay Christian Store,” said Andrew Phillips, a Memphis-based vice president of investment and retail sales at Colliers International. “The entire block just picked up and moved down the road.” This was partly because a whole new group of stores out that way, including Ashley Furniture, Dick’s Sporting Goods, and JCPenney, formed a new hub. It was also because the vacated neighborhood was getting a reputation for being crime-infested. “In Memphis this seems to happen every 10 years,” Phillips said. “Store owners decide to pick up and move two to five miles down the road. Overall, the Memphis market is stable, says Phillips, and only the older centers are suffering. With little new construction scheduled at this time, the coveted shopping venues have been filling up rapidly. “Right now the only way to get good space for a national retailer is for someone else to close,” said Massey. “I’m having to go in and buy out leases. I have to ask landlords to talk to their underperforming tenants to see if they are willing to give up their space.” — Steve Bergsman From the March 2012 issue of Shopping Centers Today

Please look for my regular post later this week!  Shawn

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