Mississippi occupancy rates are not great, but it is better than the national average
The outlook on Mississippi’s commercial real estate market in the retail sector is slightly better than it is nationwide, but still not what Realtors and developers would like it to be.
Mississippi’s retail occupancy rate is 94 percent, as compared to the national average of 92.5 percent.
And many industry professionals don’t predict an improvement until 2012, said Bob Flowers of Ridgeland’s Wolf Ridge Properties. Flowers is the state director of the International Council of Shopping Centers.
CoStar estimates that only 37 million square feet of new retail space will have been added nationwide by the end of 2010. This is lowest amount of growth in more than 25 years.
Flowers believes Mississippi is following that national trend. “Most architects and construction companies are surviving off government-funded projects. Nationwide, people are looking for the market to come back up to ‘normal’ for retail projects in 2012,” he said.
Also, it’s hard to get banks to loan money for new developments.
“Lenders are still not back in the game yet,” Flowers said.
Over $2 billion in CMBS loans will mature in the next six months, and lenders are waiting to see what happens to those troubled loans, he said.
More stringent equity requirements also make financing difficult for developers.
Of course, a decrease in development means a slow-down in the construction industry.
The construction industry in Mississippi is down by 23 percent, as compared to the industry peak in April 2008. Currently, 48,600 Mississippians are employed in construction (both residential and non-residential), according to the Associated General Contractors of America.
Mississippi’s non-residential construction spending in 2007 totaled an estimated $5.4 billion. This direct construction spending contributed $12 billion (14 percent) to the state GDP of $89 billion.
“As far as commercial construction goes, it’s down considerably. It’s reaching a critical point, really. Private commercial construction is the market that is really going to be hurt for probably the longest time. The reason being is that there are so many businesses that are closing. There are so many buildings that are empty. When the economy does turn around, you’ve got to fill up the existing buildings before you’re going to have any private development of new buildings,” said Perry Nations, director of the Associated General Contractors of Mississippi.
“The silver lining is that when that does happen, contractors who have studied and gone through the training that they need during these down times can probably make a pretty good living retrofitting and updating the existing buildings that are down right now” with energy-saving upgrades, he said.
Mississippi Shopping Center Numbers:
Mississippi Retail Vacancy Rate: 6%
National Retail Vacancy Rate: 7.5%
Mississippi Retail Occupancy Rate: 94%
National Retail Occupancy Rate: 92.5%
Mississippi’s total shopping center space (sq. ft.): 51.6 million
Share of total U.S. space: .7%
Number of jobs: 114,800
Share of total state employment: 10.3%
Source: CoStar Group. Numbers good through first quarter 2010.
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