The term “grit” has become synonymous with Memphis. The commercial real estate landscape continues to receive headwinds from interest rates, high inflation, construction prices and geopolitical tensions, but Memphis continues to show grit in the face of these obstacles.
Memphis presents a compelling opportunity for retailers seeking expansion. With a low vacancy rate of just 3.5 percent and strong occupancy levels, the city’s retail market is flourishing. The annual rent growth of 3.7 percent aligns with the national average, indicating a stable and promising environment for businesses.
Moreover, Memphis offers competitive pricing for retail spaces, with affordable rates and attractive cap rates that surpass those of neighboring markets. This appealing pricing structure, coupled with a surge in transaction activity, has revitalized the market, providing increased liquidity and investment opportunities.
The Regional Megasite of West Tennessee is witnessing a remarkable undertaking from Ford Motor Co. in its newly forged partnership with South Korean battery company SK Innovation. The ambitious Blue Oval City project is well underway. Currently valued at $5.6 billion and sprawling across 3,600 acres, the project is expected to generate nearly 6,000 job opportunities with another 30,000 ancillary jobs in the surrounding communities. Anticipated spillover effects from this venture include heightened demand for warehousing and distribution facilities in the surrounding area, as suppliers seek proximity to the new plant to effectively serve its operations.
New development continues to push ahead. Boyle Investment Co. is currently under construction on Phase II of the Williamsburg Village completing the 54,000-square-foot redevelopment project that straddles Mendenhall Road at the Poplar Avenue intersection in the heart of East Memphis. Additionally, Boyle is delivering another 50 acres of mixed-use development at its 443-acre planned development, Schilling Farms in Collierville, Tenn.
In Germantown, CRE Devco Germantown, led by Billy Orgel, has rebranded the Carrefour at Kirby Woods to The Standard Germantown. Redevelopment plans include multifamily, offices, a hotel and 88,000 square feet of retail space. The project sits at the gateway to Germantown at the southwest corner of the intersection of Poplar Avenue and Kirby Parkway.
The northern part of town has Lakeland kicking off Vince Smith’s Lakeland Town Center Phase II and his newly planned project Ashmont, which is a 99-acre development including 10 outparcels. Arlington recently announced Hawthorne, which will be a 26-acre mixed use development along the north side of I-40.
Additionally, Forked River Commons is under construction in Millington. The new power center includes Hobby Lobby, T.J. Maxx, Burlington and Aldi as anchors. Developers are actively targeting these areas due to its proximity to the Blue Oval City project.
North Mississippi continues to boom as well. Cascades, a Focal Point Development plans to start construction this fall. It’s a 170-acre mixed-use development that will include 400 residential units, including 100 townhomes and 58 cottage lots. It will also have restaurant parcels, 125,000 square feet of retail space and 40,000 square feet of office space. A supermarket and senior living facility have been proposed as well.
Memphis continues to see new retailers come to town, including Crunch Fitness, Genesis Diamonds, Rotolos’s, Local Lime, Tecovas, Torchy’s, Lush, Waldo’s Chicken and Beer, Jack Brown’s Joint, Scooters Coffee and 7Brew. Topgolf is nearing completion, and Whataburger, Big Bad Breakfast, Chase Bank and popshelf continue to seek and open new locations. There is an ongoing battle for drive-thru options and lots of owner-occupier groups are looking for pad locations. This coupled with speculative developers tying up opportunities looking for ground leases has made the market for good real estate tighter than ever.
The downtown Memphis area is experiencing significant development momentum. The Walk, poised to be the largest mixed-use development in the Southeast with over 100,000 square feet of retail space, is about to break ground. The Renasant Convention Center renovation has been completed and Tom Lee River Front Park unveiled its new $61 million renovation.
Recent acquisitions in Memphis have been largely from institutional or larger regional owners. Gulf Coast Commercial Group purchased Eastgate Shopping Center, a 454,843-square-foot mixed-use property from Dallas-based Arrow Retail.
Atlanta-based Hendon Properties purchased Germantown Village Square for $35 million. The property’s anchor retail tenants include T.J. Maxx, DSW, Old Navy, Ulta Beauty and Five Below. Recently, a partnership between Edwards Realty and Core Acquisitions purchased Collierville’s premier lifestyle center, The Shops at Carriage Crossing. They have a great vision for the 514,000-square-foot, open-air mall and have experience repositioning these types of properties.
Memphis is moving its way out of flyover country into its rightful role alongside other great Southern cities like Atlanta, Nashville, Birmingham and New Orleans. The economy is facing some headwinds over the next year to 18 months, but in typical Memphis fashion we will grit-and-grind through it. As Memphians like to say, “When you come here, you’ll get both the ribs and the slaw.”
— By Jonathan W.C. Aur, Founding Partner, Jones Aur Commercial Real Estate. This article was originally published in the July 2023 issue of Southeast Real Estate Business.