Business is holding steady in the commercial realty sector, say Realtors in three of the state’s markets. Nancy Lane of Jackson, Andy Stetelman of Hattiesburg and Brooks Holstein of Biloxi give credit to the GO Zone incentives for some of the continuing commercial construction. They do, however, know how to adjust and make marketing changes should the commercial side follow the bumpy trail of residential real estate.
“Things are holding up pretty well,” Lane said. “There has been some impact from residential lenders that has spilled over. It can’t help but have some impact.”
Watching the calendar
Plenty of projects are underway around metro Jackson, but Lane feels that may end with the GO Zone deadline looming at the end of this year for all but the state’s six southernmost counties.
“That’s spurring it on right now. The owners may sorely need a tax break if they don’t have tenants, and they will have to continue building to get the benefit,” she said.
Lane says there may be fewer startups and deals this year. “If things slow down, we’ll work harder and make more cold calls,” she said. “We’ll also see listings swap from broker to broker. It’s a cyclical thing that we see happen.”
Stetelman echoes the opinion that the impending end of GO Zone incentives is keeping construction going in Hattiesburg, but the area’s population growth continues to fuel a flurry of retail activity. Vacant properties, he thinks, are probably due to pricing.
“There’s a little more inventory, but construction hasn’t slowed,” he said. “Commercial sales have plateaued, but are still ahead of what they were before August 29, 2005. Retail, office and industrial are all going well. Usually commercial and residential go hand in hand with a slow down, but it hasn’t this time. Banks are still lending money and people are still borrowing.”
He monitors the restaurant and beverage tax in Hattiesburg and notes that the figures have been constantly climbing since Hurricane Katrina, a good indication of growth. The majority of growth around Hattiesburg is still along the U.S. 98 West corridor and a one-mile ring around Forrest General Hospital and the University of Southern Mississippi on U.S. 49. Additionally, turnkey property is in demand downtown and Petal is experiencing slow growth.
Options in place
But Stetelman, whose family is celebrating 75 years in real estate this year, knows what to do when things get slower. “We would stop construction and renovation,” he said. “In the past, my family was in residential construction and built homes. There was a slow down, and they built smaller homes, finding a market niche.”
As the founder and president of ComVest, Holstein is busy along the Mississippi Gulf Coast with retail real estate.
“Holiday sales met or exceeded retailers’ expectations here, contrary to most places in the country,” he said. “Our leasing and development activity is going very well, and I’m adding staff to my company.”
He’s never had as much activity in the brief history of his company, which was started in 2002. ComVest recently completed the area’s first two stand-alone Starbucks coffee shops.
“Two components of the GO Zone legislation are definitely helping — the tax credits and accelerated depreciation,” he said. “It’s very attractive if you are a merchant developer as we are.”
Holstein says there is a wait-and-see attitude regarding development along U.S. 90 as developers watch the costs of building and insurance. But, he is optimistic with the change in leadership in the Mississippi Insurance Department.
“We have new insurance companies now on the Coast and that has already helped on the commercial side,” he said.
Times are good, but if they turned sour, he would become more conservative in all the company does, and would focus efforts of his multi-state company in other states.
Contact MBJ contributing writer Lynn Lofton at firstname.lastname@example.org.