Market Reports

The Memphis office market continues to defy national post-pandemic office trends, fueled by persistent occupier demand and limited amounts of vacancy within primary submarkets. Although, the market closed out the 2023 year with 34,430 square feet of occupancy losses caused by two large tenant vacancies, the first quarter of 2024 reversed the trend as net absorption swung positive, recording 140,788 square feet of occupancy gains.  The Memphis unemployment rate remained low at 3.5 percent in May, just above the Tennessee unemployment rate of 3.0 percent and below the national average of 4.0 percent, according to data from the U.S. Bureau of Labor Statistics.  Ford Motor Company’s Blue Oval City began its hiring in 2023, with most of its hiring to occur in the second half of this year, which could begin to further compress the unemployment rate, as approximately 5,600 direct jobs are estimated to be created in West Tennessee. The company leased 42,910 square feet of office space on the edge of the Memphis office market. The auto giant plans to use the new space as a training facility.  Additionally, the Elon Musk-led xAI company announced Memphis as being the new home for its “Gigafactory of Compute,” claiming to …

By Stewart Lyman and Robby Davis of Stream Realty Partners Contrary to popular belief, the office market is not dying, particularly not in Nashville. While the market is facing headwinds from the interest rate environment and general economic uncertainty, Nashville has shown resiliency, bolstered by the city’s strong population growth, low unemployment rates, and a vibrant, diverse job market.  However, while flight-to-quality has been experienced well before the COVID-19 pandemic, the positive performance of top-tier buildings compared to the rest of the market has accelerated coming out of COVID-19. In 2023, Class A Tier I buildings posted 1.17 million square feet of positive absorption compared to negative absorption of 141,900 square feet and negative 32,267 square feet in Class A Tier II and Class B assets, respectively.  Top-tier buildings signed some of Nashville’s largest leases in the past year, such as Creative Artists Agency (CAA) for 75,000 square feet at Nashville Yards, Designed Conveyor Systems for 47,000 square feet at McEwen Northside and JE Dunn for 41,000 square feet at Neuhoff. In the urban core, two of the most high-profile new developments are Neuhoff (Germantown) and Nashville Yards (Downtown), both of which are elevating the tenant experience by delivering best-in-class …

The Memphis office market posted 271,828 square feet of positive absorption in 2022, and that momentum has carried into the first half of 2023. Like most markets, Class A properties accounted for the majority of positive absorption, at 218,851 square feet. This trend has already carried into 2023, as Class A properties lead net absorption totals to begin the year.  As a result of a strong year, the vacancy rate has fallen to 12.4 percent market-wide, an 840-basis-point decrease from the height of the pandemic. Additionally, sublease availabilities are less prevalent in Memphis than other comparable office markets. Currently there is 257,681 square feet of sublease space available in the Memphis market, which has a total net rentable area of 21.7 million square feet. The average among similarly sized Southeast markets is 422,624 square feet. There haven’t been substantial space additions to outweigh the below-average leasing activity thus far in 2023.  The Memphis unemployment rate continues to trend downward to 3.2 percent in April, slightly lower than Tennessee’s 3.3 percent unemployment rate and the national rate of 3.7 percent. The tight labor market has increased demand in East Memphis, as tenants demand high-quality, highly amenitized buildings to attract and retain …