Members of the Mississippi Commercial Association of Realtors are taking a year-end look at trends in sectors of the state’s commercial real estate industry. They see continuing strong markets for retail and office space and for agricultural and recreational land with growth in distribution/industrial land in North Mississippi.
“We are still experiencing an active market in retail,” said Philip Holman of The Mattiace Company. “We read about the housing slump, but so far we’re not seeing that trend in retail. Things look positive in Jackson and other areas.”
He still sees development and tenants leasing new space in the larger towns with numerous projects under construction and development in Flowood, Ridgeland, Madison, Tupelo and on the Coast. Strip centers are popular but mostly limited in size to five to 10 tenants. Power and lifestyle centers are gaining favor for retail in the state.
“Lifestyle centers are not enclosed like traditional malls and have a cluster of buildings with an open-air center,” Holman said. “They have larger, upscale stores and boutiques with food and entertainment in the center. People go there for the entertainment value and shopping is an experience. You don’t just run in and out.”
Power centers bring big box tenants and increased traffic with small shops and food venues around them. “The newest trend is that Target is being pursued in markets all over the state,” he said. “A lot of retailers want to locate with them. There are not many Targets in the state and it’s a big deal when one locates here.”
Ted Duckworth of Duckworth Realty in Jackson said the office sector is healthy around the metro area. “There are office buildings under construction downtown and out east and north,” he said. “We have 95% occupancy in our class A and B space downtown. There seems to be a need for new space.”
He said the Highland Colony Parkway area is building office space and will anchor the city along with downtown.
“Flowood is probably the tightest sub market in the city,” he said. “There’s not a lot of new construction there. Most of it is built by an owner/occupant who has a small amount of space for lease.”
Duckworth is leasing space in the huge former WorldCom building in Clinton. Almost 85,000 square feet of space has been leased since August to tenants that include Automatic Data Processing, University Physicians, Verizon, Bell Industries and the Reznick Group.
The land markets of the state are different, but David Johns of the Mississippi Land Company said the Southwest and Delta are the most active areas for his Hattiesburg-based company for recreational and agricultural sales.
“In the Southwest, things are still active for the most part with the oil business out of Louisiana driving it,” he said. “These are people who are firm believers in buying property and having recreation. It’s our hottest market.”
There’s a lot of interest in Delta land from out-of-state and foreign investors with the expectation that rental rates will escalate with commodity prices rising. “Cotton, corn and soybeans are still pretty strong,” Johns said, “and the expectation is that the value will rise on properties with that underlying asset.”
He sees some activity with 1031 tax exchanges in Northeast Mississippi as cattle farmers from Central Florida and Georgia look for large, contiguous plots of land as land is sold to developers in those states.
‘Aren’t bad but not real good’
The Southeast area is beginning to slow down after a tremendous surge of activity following Hurricane Katrina. “The pent-up demand has been satisfied and people are sorting things out,” he said. “Things aren’t bad, but not real good, either. Markets typically do this and make natural corrections.”
Johns believes the state is still poised to do well, and has benefited from publicity after Katrina and from incentives of the GO Zone legislation. “More people looked at us and will continue to going forward,” he said. “They’ve been impressed by what they’ve seen here and that will greatly enhance our image.”
There’s not a lot of industrial real estate in Central Mississippi, says David Hoster of the EastGroup. “This is not a real industrial market but we’re doing well with what we have,” he said. “The market is good in North Mississippi as an extension of the Memphis metropolitan area. It’s a big box market.”
He said Mississippi doesn’t attract a lot of distribution centers because it’s located near the major distribution centers of Dallas, Memphis and Atlanta.
Contact MBJ contributing writer Lynn Lofton at firstname.lastname@example.org.