One Jackson Place has made a positive start for the new year with the CPA firm of Haddox Reid Burkes and Calhoun moving over from Regions Plaza to occupy the fifth floor space vacated by the U.S. Attorney’s Office.
In moving across Lamar Street, Haddox Reid Burkes and Calhoun vacated the building that had been its home since the opening of Regions Plaza 35 years ago. The 50-plus-year-old financial services firm started there at about 5,000 square feet and through the years grew to occupy 12,500 square feet. But Regions Plaza could no longer accommodate the growth Haddox Reid Burkes and Calhoun sees coming in the near future – at least not on a single floor, said Paul Calhoun, managing partner.
The firm is occupying 14,500 square feet at One Jackson and can expand its fifth floor space by another 2,500 square feet, Calhoun said.
He said the firm had a strong desire to stay downtown. “It’s centrally located to our clients as well as the people we employ.”
Downtown’s amenities, including secured garage parking and multitude of restaurants, also figured into the decision, he said.
“This allows us to grow and stay on one floor,” he said of the 56-person firm.
Landing Haddox Reid to a lease of approximately eight years capped a brisk year of leasing activity for Parkway Properties, a real estate investment trust that either owns or handles leasing for a third of downtown’s office properties, including the Pinnacle building that adjoins One Jackson Place. Parkway did about 200,000 square feet of office leasing in metro Jackson in 2011, according to John Barton, Parkway senior VP and senior asset manager. “Half of that is new leases,” he said.
He said he looks for Parkway’s tenant levels to remain largely unchanged in 2012. “We don’t have many lease expirations next year. We’re pretty stable in that regard.”
One Jackson signed the law firm of Balch & Bingham to 27,000 square feet and gained a renewed lease and full floor renovation from the GodwinGroup, a marketing and public relations firm.
The 221,293 square-foot One Jackson is 82 percent leased, according to Barton.
At the Pinnacle, Parkway is still looking to lease 30,000 square feet vacated by the move of the U.S. Bankruptcy Court into the new Federal Courthouse. Even with that departure, the Pinnacle is 87 percent leased, Barton said.
The loss of Haddox Reid left the 316,428-square-foot Regions Plaza at 68 percent leased. That percentage is expected to go down early in the new year as some minor vacancies occur, said John Michael Holtman, VP of brokerage for Duckworth Realty, which manages Regions Plaza.
“We’re still a net positive for the year,” he said, and noted the building leased 45,000 more square feet than it gave up in 2011.
Occupancy gained a sizable boost with the signing of a lease in late spring by the State of Mississippi for more than 50,000 square feet. The Mississippi State Personnel Board and the Mississippi Department of Finance and Administration’s Management and Reporting System moved into empty space on the second, third, fifth, eighth, 13th and 14th floors.
“I don’t think the loss of Haddox Reid speaks to the viability of the building,” he said, noting Regions Plaza chalked up 75,000 square feet of new leasing in a Central Business District that had negative absorption of 23,000 square feet at the close of the third quarter and a vacancy rate of 27.17 percent.
Regions Plaza will lose longtime private dining tenant The University Club early in 2012. Holtmann said he has no expectation to signing a conventional restaurant to the full floor of 15,000 square feet the club will vacate.
The space could be converted to office use, according to Holtmann. “That’s a decision we’re weighing right now.”
In the meantime, Duckworth Realty is marketing the floor for use by another private club or as office space, he said, though he noted a business similar to The University Club could be difficult to attract considering that private dining clubs in cities across the country are closing.
Both Holtmann and Barton are eager to see the eventual move of the 500-employee Mississippi Department of Revenue into the Landmark Center at Lamar and Capitol streets. The building emerged as the top choice in a market study performed for the state by international commercial real estate firm Cushman & Wakefield. Legislators are to decide this year whether to go with the recommended site. Conversion of the building for state use would take about three years, state officials say.
“We like the move,” said Holtmann, who expects that if lawmakers give the OK for the move this session he could begin gaining prospective tenants for Regions Plaza that work with the Revenue Department.
Barton said One Jackson and the Pinnacle could gain as well from the move. “That could be some of our new activity,” he said.
He said the Revenue Department’s arrival could also bring a boom in new retail and restaurants in the vicinity of the Landmark Center.
Holtmann and Barton are also eager to see more vacant office space downtown converted to hotel or residential use, thus taking more product off the office market and bringing down a vacancy rate that has stubbornly remained in the 25 percent range for several years.
Barton said he expects older office buildings in the Central Business District will draw the most attention by developers interested in conversions. “These buildings with the smaller floor-plates are the ones more conducive to redevelopment as hotel or residential,” he said.
Waiting lists in newly converted residential building downtown show demand is there, Barton added.
What’s more, the people who move into the newly converted residences are equally likely to want office space downtown, Barton said.
With the “repurposing,” Holtmann said, “the (office) market will get thinner and healthier.”
The circa 1920s Regions Building next to Regions Plaza is among likely candidates for conversion to residential. He said he knows of at least one other but declined to identify it.
“Our hats are off to anyone doing these projects,” he said.