While the commercial real estate market is not immune to the current calamity of the residential market, commercial Realtors say they are staying busy – really busy. They are reporting traffic is well up.
Lenders are a little gun-shy because of the mortgage crisis, but that is not creating significant obstacles to sales. And the rise in vacant commercial space gives buyers/tenants plenty to choose from.
“Traffic is way up,” said Andrew Mattiace, president and founder of Mattiace Properties Inc. in Jackson. He said his business was up 60% in September, and it is not due to discounted space.
“In Mississippi, in general, I have not seen a significant drop in pricing,” he said. “That does not hold true for other areas, such as Atlanta and Dallas, where prices have fallen significantly.”
Mal Kretschmar of Kretschmar Realty Inc. in Greenville reports much the same.
“We’re definitely not singing the blues. We are busy,” he said. “The residential side is about as puny as I’ve ever seen it, but the commercial side is doing quite well.”
Mattiace said most of his increased business is from the retail sector. Retailers stocked up for back-to-school sales, the Viking Classic played in Madison in September and the upcoming holiday season. Great weather was also a plus. Thus, retailers were generally looking for more space, not less.
He admitted, however, that shot in the arm may soon wear off.
“I do believe we will eventually see fallout from the current economic woes,” Mattiace said.
Kretschmar said he is currently seeing a buyer’s market. Lenders are taking a closer look at deals, but is not a serious concern. He said many are avoiding lenders all together.
“Cash is king right now,” he said.
To emphasize his point, Kretschmar pointed to the recent closing of a four-story commercial building in Greenville currently occupied by Regions Bank. Kretschmar was handed the property in April. By early June, the property had drawn eight proposals, though many were not very strong. He said they were hoping seller would be “desperate” and take a weak, but all-cash, deal.
“They were purposely low-balling, just to try to get in the door,” Kretschmar said. “But they had cash, and they thought that perhaps they could get a great deal from the seller because of that.”
One of the eight proposals, one was accepted — a cash deal with no contingencies. But two days later, another group out of New York made a higher offer, though it was non-cash and asked for a period of due diligence. The seller promptly dropped the first winning proposal, and accepted the New York offer.
However, after due diligence the prospective buyer pulled out. So, Kretschmar went back to work, and 10 days later had five more proposals. One was accepted — an all-cash, non-contingencies transaction.
“It was a saga,” he said.
Wide price range
While pricing on commercial real estate in Mississippi has been steady, there are still a wide range in price per square foot. And prices may surprise
Data from the Mississippi Business Journal’s 2008-2009 “The Guide: Office, Industrial, Malls & More” showed the average rent per square foot of a random selection of 18 properties in Hattiesburg is $3.80, while in nearby Laurel, the average on four properties was $7.33.
In the metro Jackson area, the average per square foot lease price for 16 properties was $17.23, while in the Olive Branch/Southaven/Horn Lake area, a short list of four properties were leasing for an average $10.80.
One might expect pricing to be much lower in the Mississippi Delta, but that is not the case. In Greenville, 13 properties carried an average lease price of $7.58, almost double Hattiesburg and higher than Laurel.
Contact MBJ staff writer Wally Northway at email@example.com.