In less than 24 months, metro Jackson has lost more than 5,000 white-collar jobs and several major corporations. The dampening effect on the commercial real estate market has been tremendous, and an upturn may not be in sight until third quarter 2003.
“In the last two years, Entergy moved some of its operations to New Orleans, WorldCom and SkyTel tremendously diminished their job base, Allstate closed its regional headquarters in Jackson, and Tritel exited the market,” said Mark S. Bounds, CCIM, of Mark S. Bounds Realty in Madison. “Any time a third-tier market like Jackson loses that many jobs, it leaves a lot of vacant holes in the Class A office market, and of course, the Class A market drives the use of space in smaller markets.
“And that’s the user side. On the investor side, there’s a compounding effect because many investors were buying real estate with stock market gains. That evaporated over an 18-month period, so the user market fell way off. One of the gauges we use is the Highland Colony Parkway because we’ve watched it so closely and it’s been the hot new place to put office users. This past year, it’s been a zero out there.”
It may take several years before Nissan’s new plant near Canton opening this spring impacts metro Jackson, said Bounds.
“It’s too early to tell about the Nissan effect,” he said. “Nissan has enough land available to them from the initial acquisition that they may never need expansion room. Most supplier plants have been built on publicly owned industrial land. So far, the net effect has been minimal, even though we think that over the next three to five years as Nissan matures, we’ll see a fair amount of warehouse and industrial support built.”
Because of 40-year low interest rates, the residential market has spurred continued activity in home buying. By mid-2003, it may be a buyer’s market for executive homes “simply because the jobs will not be replaced that were used to buy those homes to begin with,” said Bounds.
“2003 will probably mirror the last six months of 2002,” he said. “There’s no signal out there that indicates something will happen to produce 10,000 to 15,000 new white-collar jobs in Jackson. It’s not just Jackson, it’s nationwide.”
Chris Wilson, a commercial realtor in Laurel, described the market as “mediocre” and “flat.”
“I can’t tell you I’m pleased with the amount of business that Laurel has had in commercial development, but I can tell you my bills are paid,” said Wilson. “That’s important and I’m thankful for it. My impression about Mississippi is that the smaller communities in our state generally have had a flat market relative to commercial development without many great successes. There’ve been some bright spots, but nothing extraordinary.”
Following the trend of the general economy, fewer companies are expanding, said Wilson.
“To make up for lackluster business, we’ve called more people and worked longer hours looking for that acorn that’s out there,” he said. “That’s about all those in us in small communities can do in tough times.”
The Mississippi Technology Corridor along I-59 holds “incredible potential,” said Wilson.
“Howard Industries is planning extraordinary growth and that will absolutely create more business,” he said. “When you add in the distribution and medical community in Meridian, the university and medical community in Hattiesburg, Stennis Space Center and developments on the Gulf Coast, and the influence of New Orleans, this technology corridor has gigantic potential and we’ll eventually see some big changes.”
Walter D. Becker, CCIM, a Jackson commercial realtor, said some colleagues say it seems more like a “downhill run” than a “flat run.”
“It’s a given that it’s one of the two,” said Becker. “From a retail standpoint, 9/11 really tore into us. It even did damage to office space. Cutbacks affected everyone. A lot of downsizing is still going on, and it’s all part of the national trend. Twenty years ago, we weren’t as affected as much by national trends. In the late 1990s, aided by the tech boom, Jackson became an attractive trade area, and we now have Sam’s, Circuit City, Target and Best Buy, and others like that, not to mention national restaurant chains.
“In 2000, the market slowed. Then in early 2001, the market got shaky. After 9/11, when people stopped spending and were concerned about going to war, things looked bad, and the national trends impacted Jackson. Service Merchandise and Home Place closed, not because of Jackson, but because of the company’s overall performance. But in 2003, I’m optimistic we’ll go opposite the national trends. When Nissan employees start spending money, we’ll see more dollars in circulation and have more backbone in our economy. When the curve goes up, decision-makers will start looking at us again. First, it will fill up what we lost, and then we can justify demand for new construction.”
An upturn in mid-2003 is anticipated — if the U.S. isn’t heavily involved in military conflict and if the stock market has shown a substantial rebound, said Bounds.
“The last report I saw showed over $7 trillion in wealth lost in the stock market and it will take a while for that to be recouped,” said Bounds. “Until some of that wealth is regained, we’ll have a fairly slow commercial real estate market.”
Contact MBJ contributing writer Lynne W. Jeter at firstname.lastname@example.org</a.