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Overbuilding, economic downturn, casino plateau contribute to slowdown

Tunica County apartment market crowded

ROBINSONVILLE — In the beginning, there was only one apartment complex. Surrounded by cotton fields in every direction, River Pointe Apartments looked deserted and out of place when it was built in 1996.

But the 152-unit apartment complex, the first multifamily housing option for throngs of casino employees pouring into Tunica County, quickly filled up at premium rates.

Five years later, River Pointe Apartments is surrounded by competition. In addition to new properties that have come online in the last several years, two apartment complexes are in a lease-up mode, and developers are mulling additional phases.

“The apartment market in Tunica County is in terrible condition at the moment,” said Ann Holland, regional vice president for Atlanta-based VIP Management, which also manages Delta Bluff Apartments, a 152-unit apartment complex completed in 1996 in nearby Walls.

“It’s so greatly overbuilt. The brand new properties have lowered their rates to below those of the properties that had been operating for three or four years. It’s been very difficult to do business. River Pointe is barely hanging on to 80% (occupancy) and we’ve been at the same level now for about a year.”

Even though River Pointe’s rents have fluctuated since it opened, the rates have settled near its initial offerings. One bedrooms rent for $569; two bedrooms command $654; and three bedrooms start at $759.

“The change in market conditions can be attributed to overbuilding, an economic slowdown, and a general plateau in casino activity,” Holland said. “Casinos didn’t bring in many new people in all of 2000 and now 2001. However, there are a couple of new ones that have just come into the Tunica area. Splash has come back and another one is coming online.”

Cypress Lakes Apartments, a new 160-unit multifamily property surrounded by a heavily landscaped 14-acre lake, opened last year and reached 95% occupancy in March. Talk of a new phase at the apartment community, managed by Makowsky Ringel Greenberg, LLC, a Memphis-based real estate firm, has been put on hold.

“We held it at 95% for a couple of months, but now that the first leases are over, we’re seeing a few move-outs, mostly job transfers. It’s not that people are buying houses,” said Jimmy Ringel, president of Makowsky Ringel Greenberg, LLC. “We’ll continue to market aggressively, like we would in a lease-up. But we’re not talking about a second phase just yet.”

A few miles away, the landscape changes. Lucille Brown, manager of Shady Lane Apartments in Tunica, an 81-unit apartment community built in 1988, said the property “stays full.”

But in nearby Walls, which is often included in the Tunica market, and is located midway between Robinsonville and Memphis on U.S. 61, traditional apartment communities, such as Delta Bluff, and its next door neighbor, The Commons, with 200 units built in 1998, are struggling.

“In the Walls area, where Delta Bluff is, it’s 10 miles to the closest grocery store, and only one convenience store in closer proximity than that,” Holland said.

Bart Todd, general manager for Park Management, a property management firm specializing in tax credit properties in Mississippi, Louisiana, Arkansas and Tennessee, supervises Laurel Park, a 144-unit tax credit property in Walls. Laurel Park began leasing units this spring.

“Tax credit properties are so different, that the market hasn’t really affected them,” he said. “So far, we’ve been pretty lucky leasing them up.”

Others haven’t been so lucky. Brandi Manning, executive director of the Multifamily Council for the Home Builders Association of Mississippi, said comparative statistics for the Tunica market were unavailable, but added that market conditions have been tough for the apartment market statewide.

“In the last year, I’ve probably had more owners or supervisors calling me about numbers, especially out of state people, wondering, ‘Is this my manager or is it the market?’” she said.

Two new kids on the block in Robinsonville include 112-unit Gardens of Canal Park and the 160-unit Plantation.

“We have been running behind target, but we should be caught up to our projections within the next 30 days,” said Eddy Chester, regional property manager for Ledic Management Group, which began lease-up at Gardens last October. “There are only so many people looking for an apartment in Tunica County.”

Rents at The Gardens are comparable to River Pointe’s. One-bedroom rents begin at $560; two bedrooms start at $660; and three bedroom apartments range from $760 to $795. Management recently began offering a full month’s free rent on a 13-month lease. River Pointe is offering a similar incentive.

“In addition to a pool, fitness facility, and other standard amenities, we furnish washers and dryers in every unit included in the rent, which is pretty big with renters,” Chester said.

According to an onsite source at The Plantation, 53 of its units were already occupied and 12 were preleased, as of mid-June. Managed by ALCO, 112 units are pending to be built later. Julie Netemeyer, in business development and marketing for The Apartment Locators Inc. in Memphis, said competition has spurred more interest in the area.

“I think the market will catch up,” she said. “Before, people may have had one choice in the area. Now, depending on their personalities, where they want to live, and their budgets, consumers have more choices, which in itself, is attracting more people to the area.”

The Robinsonville market is attracting renters who work in Memphis, particularly downtown Memphis, but want to live in a less congested area with “a laid-back atmosphere,” Netemeyer said.

But Tunica County is facing stiff competition from surrounding boom towns — Hernando, Horn Lake, Southaven, and Olive Branch — where apartment communities are popping up.

“There’s competition coming online everywhere — very nice properties — and condos that offer weekly and daily rates,” she said. “At the same time, our corporate business is increasing, say, business people that come in for training. Many work at the casinos.”

Ken Murphree, county administrator for Tunica County, said gaming revenues are up 2% for the first nine months of FY2001, according to the Mississippi State Tax Commission. So far this fiscal year, the county has received revenues of $32.7 million. In the same time period in FY2000, gaming revenues totaled $32.1 million.

“It’s not the double digit increases we experienced two or three years ago, but by the same token, if you look at the economy in these last nine months, there aren’t many companies that have experienced much better than 2% increase in revenues, especially in the tourism industry,” he said.

Tunica remains the third largest casino destination in the U.S., after Las Vegas and Atlantic City. Since gaming was legalized in 1992, more than 13,000 casino jobs have been added to the Tunica County economy. In 1996, gross casino revenue was $820 million. In 1997, it was $931 million. Construction of a new school is underway in the north end of Tunica County, and the expedited schedule of building new Highway 304 will link Highway 61 to Interstate 55, with a revised completion date of2004.

Even though Casino Factory Shoppes, part of a master planned 600,000-square-foot retail outlet center on 60 acres, is drawing shoppers from all around, Robinsonville does not yet offer many of the amenities of its neighbors, such as competitive grocery stores.

“We’ve had better traffic and people are more positive about growth,” Holland said. “Summer is typically our busiest time and things a
re l
ooking up.”

Contact MBJ contributing writer Lynne Wilbanks Jeter at lwjeter@yahoo.com or (601) 853-3967.


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