2000 was Good Year for Real Estate

By Mary Dando
– The Daily News –

What a long, strange year it’s been.

It was a phenomenal year for home sales, according to the Memphis Area Association of Realtors. Though sales were down compared to 1999 figures, they were "still great," said Lee Ann Williams-Maley of MAAR.

"In the past three years, the Memphis area real estate market has been exceptional. We anticipate that when 2000 comes to a close, we will see that the trend is continuing," said Pat Beech, MAAR president.

The office real estate market has been on a roller coaster, as well.

Leasing activity increased during the third quarter, according to CB Richard Ellis. However, with the addition of 472,344 square feet of new speculative space, occupancy dipped to 89.9 percent, a decrease of 0.8 percent from fourth quarter 1999.

Areas with the greatest amount of office occupancy are Downtown, Southeast and Germantown/Collierville. Downtown had the greatest activity, gaining 210,274 occupied square feet, as a result of renovating and opening the Toyota Center.

Emily Forman, a market researcher at CB Richard Ellis, said the firm saw a bunching of construction in 2000. Most construction planned in the past several years was delivered this year.

"We have certainly seen more construction this year than most years in the past. Because of that there’s been quite a bit of leasing activity, but a slowdown on the actual statistics when we look at it.

"Next year, we will be approaching stability again in the office market," Forman said.

Typically, leasing moves just behind the pace of construction, Forman said.

"Partway through next year, we should see a regaining of that stability in the office market as the tenants move into that new construction," she said.

One major player in the Memphis market had a banner 2000.

Boyle Investments continued developing in Schilling Farms in Collierville.

Site work began in June for a new 104,000-square-foot corporate headquarters facility for Helena Chemical Company. Boyle expects initial occupancy by August, said Cary Whitehead, Boyle’s senior vice president.

Boyle will eventually offer more than 1 million square feet of office space in Schilling Farms.

"Helena will occupy 80 percent of the building. The remainder of the building’s space is available for lease," said Mark Halperin, senior vice president of office properties for Boyle.

Boyle also is developing a new 150,000-square-foot office building in Ridgeway Center. Anchor tenant Morgan Keegan will occupy 50,000 square feet when the building is ready for occupancy, as will Sedgwick CMS.

Sparks Company also will occupy a 125,000-square-foot building at the Ridgeway Center, as home to both Sparks Company and bond trading company Vining Sparks.

"This has been a great year for Boyle," Halperin said.

"We’re just now completing the new 50,000-square-foot West Clinic at Humphreys North, and we have just announced that we are starting the new Semmes-Murphey Clinic at Humphreys, which will be another 50,000-square-foot project, so we’ve had a heck of a year."

"We’ve probably done more office development in 2000 than anybody else, so we’re very pleased and excited about what 2000 has brought to us in terms of building activity. I think 2001 is going to be good..

"We’re optimistic for a good year. The market has slowed down a bit, but Boyle has still some great sites. We’re on quite a run in terms of doing really great key office transactions," he said.

After a dynamic start in 2000, industrial market leasing activity tapered off in the third quarter, dropping from nearly 8.5 million square feet in the first half of the year to 2 million square feet in the third quarter.

While a total of 5.2 million square feet was absorbed in the Memphis metro market during the first nine months of the year, only 200,000 square feet was absorbed in the third quarter.

According to CB Richard Ellis’ third quarter report, construction also slowed down in this period, with about 200,000 square feet completed in three months, bringing the cumulative total to 3.3 million square feet of new industrial space this year.

This year also saw a rise in rents, but at a slower pace, rising 2.8 percent from year-end 1999 to an average asking lease rate of $3.20 per available square foot.

Bulk warehouse asking rates are $2.55 per available square foot, while standard distribution asking rates are $2.91. Research and development technical space asking rates averaged $7.23.

CB Richard Ellis industrial real estate senior vice president Jim Mercer has seen a revival in industrial leasing as 2000 draws to a close.

"In the last quarter, we’ve seen a significant increase in activity both in people looking at space and then leasing activity. I think 2000 was a good year with a slow summer but with a strong first half of the year and a strong fourth quarter," he said.

"It looks like the activity for 2000 will be as good or possibly slightly better than the last several years, which have been records that’s in relation to leasing activity.