A signing of a lease by the State of Mississippi for more than 50,000 square feet in the half-empty Regions Plaza building Friday gave downtown Jackson’s office market just the break it had been wanting.
The new tenants are the Mississippi State Personnel Board and the Mississippi Department of Finance and Administration’s Management and Reporting System. They will be moving into empty space on the second, third, fifth, eighth, 13th and 14th floors, according to John Michael Holtmann, VP of brokerage for Duckworth Realty and leasing agent for Regions Plaza.
He said the state offices will be fully occupying the eighth, 13th and 14th floors.
“It’s a mix of floors that will best accommodate their needs,” Holtmann said.
The new major tenants will bring occupancy to 64 percent, with just under 100,000 square feet still empty in the 316,428 square-foot multi-story Capitol Street building. The new leases alone increase the occupancy of the building by 15 percent, Duckworth Realty says.
Both agencies have started their build-outs in preparation for moving in late May or early June. Each of the floors leased to the state will be refurbished to match the work functions of each agency.
In an interview earlier this month, John Barton, senior VP and senior asset manager for Parkway Properties in Jackson, said filling up a greater portion of the vast empty spaces in Regions Plaza would be significant in helping downtown achieve lower a vacancy rate of more than 25 percent. “It’d have a major impact on the market,” he said.
Now a big step has been taken in that direction, Holtmann said. “I think it helps the absorption numbers… there is some real growth seen through this.”
Further, it positions Regions Plaza to gain new private sector tenants who contract with the agencies or others that need to be in proximity to the agencies.
“We’ve seen in other cities that government going into private buildings kick starts other growth,” he said.
The new jobs in the building will boost business for Regions Plaza retailers as well, he noted.
Whether the higher occupancy will help stabilize downtown lease rates is not yet clear, according to Holtmann, who leases at Regions Plaza for about $17 a square foot. “At this point I don’t know. We’ve had a heavy supply picture.”
The Mississippi State Personnel Board will be moving from a state owned building and the Management and Reporting System division of the Department of Finance is being newly created.
Regions Plaza has been nearly half empty since the exit 18 months by major tenants Butler Snow, a law firm, and HORNE CPAs, to the 200 Renaissance Building in Colony Park in Ridgeland.
As in previous quarters, the downtown Central Business District showed the highest vacancy rate, 25.07 percent, in the fourth quarter, according to the quarterly survey by Parkway Properties.