Home » FOCUS » Vacancy rates low for commercial real estate in key areas

Vacancy rates low for commercial real estate in key areas

Commercial real estate continues to thrive and grow around the state with several urban areas experiencing boom times.

“Hattiesburg is still on fire,” said Andy Stetelman, whose family has been in the commercial real estate business for 71 years. “With all the activity at Camp Shelby, the expanding medical community and growing electronics industry, there’s a big turnover and influx of traffic.”

He said the area is in stage three in retail growth and is seeing a number of big box stores, including Best Buy, Rex and Circuit City, building new facilities. “We’ve become a larger regional draw than we were five years ago,” he added. “We are a city of 50,000 population, but we draw from a population of 150,000 within 20 to 30 miles.”

Stetelman, whose grandfather started the real estate business in 1933 that is now known as London and Stetelman, said new retail space in Hattiesburg leases for $14 to $16 and $9 to $11 for older space. Prices for office space run $7 to $8 per square foot with some class A space available at $14 to $16.

“Commercial real estate has a tremendous impact on the economy here,” he said. “Some people are coming out of the stock market and using it as an investment. Real estate is a good risk.”

Gulfport Realtor Ray Crowell says commercial real estate is having its greatest activity on the Coast since it hit a low in the months following the September 11 tragedy. “There’s been steady improvement and retail seems to be hot right now,” he said. “We have a number of big box stores but need to capture some more.”

He said one of the problems in attracting retail outlets such as Target is that they do not appreciate the way the Coast’s population is spread out. “Target is looking for a concentration of housetops within five miles, and they don’t seem to understand that we have a population of 400,000 that drives 20 minutes to shop,” he said.

Crowell, who’s been in the business since 1974, says the D’Iberville area around Interstate 110 is growing and so is the Crossroads retail area in Gulfport where 107,000 vehicles pass daily.

Ellen Short, a past president of the Mississippi Association of Realtors, has been selling commercial real estate in Tupelo for 30 years and is the third generation of her family to do so. “The commercial market here is very good, particularly for new development,” she said. “It’s been a good year and we’ve got activity all over.”

She lists the Tupelo Commons near the mall, downtown and West Main Street as hot spots. Furniture outlets, retail and office space, restaurants and a new business incubator are some of the new commercial establishments.

Office and retail activity is growing in Jackson, according to Hugh Johnson, an associate with Walter Michel Commercial Realtors. There’s a lot of expansion in Rankin and Madison Counties with the area near the Dogwood Festival mall especially booming.

“There’s a half-million square feet of retail space of the strip center type opening up across the street from the Dogwood Festival and some big box users coming in,” he said. “All the areas around Highway 25 and Lakeland Drive are growing too.”

Johnson, who’s been a Realtor for 10 years, says retail price varies according to the age of the space and the amount of improvements made. It runs from $12 and $13 to $17 and $18 per square foot.

He said several areas of the Capitol City are doing well with office space, including downtown where primary space rents for $17 and $18 per square foot. The Highland Colony Parkway in Madison County has a large percentage of class A office space with a low rate of $16.50 per square foot to a high of $22 with a full-service lease. Jackson also has classes B and C space that runs as low as $10 per square foot.

“It’s a stable part of real estate with 10% vacant,” Johnson said.

The commercial segment has been especially busy in DeSoto County over the last five years, said Chuck Roberts of Chuck Roberts Commercial Real Estate. “There’s been significant growth with 400,000 square feet of retail space coming on the market since the late 1990s,” he said. “In the next five years, an additional two- and-a-half million square feet will be available.”

He says there’s a less than 10% vacancy rate with only 3% or 4% for newer space, and he expects the rate to drop even lower as new businesses open. Lease prices range from $14 to $20 per square foot.

“We’re hitting a new level of retail development with some big box stores and two new lifestyle centers opening,” Roberts said. “One, the Southaven Town Center, is now under construction and the other one will be by the end of the year.”

Lifestyle centers, he explained, are the latest concept in shopping facilities. They are open-air malls connected by large, covered sidewalks. They have anchor stores like enclosed malls but don’t have as much parking space.

“They’re convenient because you can park close to the store you want to enter. Also, they have a closer, more intimate setting,” he said. “They do well in the southern part of the country where cold weather is not a problem.”

Roberts says office space in Southaven mostly consists of residential buildings that are less than 10,000 square feet and rent for $10 to $12 per square foot. An exception is the area around the large Baptist Hospital where prices run from $14 to $20 per square foot. The vacancy rate is 15% for office space.

Contact MBJ contributing Lynn Lofton at mbj@msbusiness.com.

About Lynn Lofton

Leave a Reply

Your email address will not be published. Required fields are marked *

*