If it’s been several years since visiting Memphis, it’s time to come back and see the improvements. The city and suburbs have experienced large amounts of new construction and redevelopments, from the downtown Memphis Pyramid becoming the grandest Bass Pro Shops outside of their headquarters to the new Tanger Outlets in Southaven, Miss., and many more developments in between.
The most active retail category continues to be restaurants, followed closely by grocers and service-oriented retailers. New restaurants have leased space across the market, varying from fast-casual options like Pimento’s Kitchen + Market to upscale options like Cheesecake Factory and Char, a steakhouse based in Jackson, Miss.
In the grocery sector, Kroger, The Fresh Market and Whole Foods Market expanded their reach by adding new and redeveloped stores. Kroger, with its 125,000-square-foot Marketplace concept, is further solidifying market share and geographic footprint with Marketplace units in Hernando and Arlington and a 100,000-square-foot unit in Germantown. These locations were also joined by new-to-Memphis Sprouts Farmers Market. Trader Joe’s also announced plans to open a new store later this year.
Parrish Taylor,
CBRE
One of the most notable new Memphis-area retailers is IKEA, which opened its 271,000-square-foot store along Interstate 40 in late 2016. The store is the first IKEA in Tennessee and is increasing traffic and demand in the already crowded Cordova submarket.
The other significant investment in Memphis was by Bass Pro Shops, which transformed the downtown entertainment venue into its largest retail center. The Bass Pro Pyramid, which opened in mid-2015, has 220,000 square feet of retail space, in addition to a bowling alley, restaurant, shooting range, Ducks Unlimited office, Beretta Gallery, 28-story freestanding glass elevator and a 105-room hotel, the Big Cypress Lodge.
As consumer priorities change, retailers and developers have shifted business plans to include more experiential retail opportunities and placemaking. This trend has also gained steam in the Memphis market, initially with Loeb’s Overton Square redevelopment, and most recently with Dave & Buster’s lease at Brixmor’s The Commons at Wolf Creek, expected to open in the fourth quarter.
Shopping center owners and developers are also balancing revenue changes from online shopping by including service-oriented retailers into their tenant mix. These retailers encourage more consistent visits from customers and include restaurants, entertainment, medical companies, educational centers and fitness centers. As in other markets, retailers selling tangible goods are increasing their omnichannel capabilities, often an easier task in Memphis due to its distribution might.
Infill developments, especially along the main thoroughfares of Germantown Parkway and Poplar Avenue, point to both a healthier market economy and the average shopper hitting his or her geographic limit for driving, while still desiring the newest and grandest shopping experience. The ongoing redevelopment by Seritage of the former Sears store in the East submarket is finally taking an underused asset to its best use. The former store and auto center were torn down and will be replaced by a multi-tenant center anchored by Nordstrom Rack, Ulta Beauty and LA Fitness. Construction delivery is estimated for the end of the year.
One of the most creative projects in the Memphis market is Crosstown Concourse, the $180 million redevelopment of the vacant Sears regional distribution center, mail-order processing center and retail store built in 1927 in the Midtown area. Redeveloped as a vertical urban village, it will total 1.5 million square feet, of which 65,000 square feet will be retail space, with a grand opening in this spring. Tenants will include Kimbal Musk’s The Kitchen Next Door, Area 51 Ice Cream, Curb Market, a fitness center, the Church Health Center clinics, a charter high school, a contemporary art center, commercial offices and 265 loft-style apartments.
Green-field development has increased in outlying Memphis suburbs, including Southaven, Lakeland, Arlington and Millington. Notable new developments along Goodman Road in Mississippi include Academy Sports + Outdoors, Hobby Lobby, Five Below and Malco’s Olive Branch Cinema.
The Germantown submarket has also had significant redevelopments, especially in the Saddle Creek shopping center. Saddle Creek West received a multimillion-dollar redevelopment by TradeMark Properties in which the shopping center was repositioned to offer 40,000 square feet of new retail space. The other Saddle Creek buildings also received updates to façades, plazas, lighting, signage and landscaping. Less than a mile east of Saddle Creek is the new Whole Foods Market, 41,000 square feet fronting Poplar Avenue at the edge of one of Memphis’ strongest and priciest residential areas.
Comparable markets to Memphis have recently seen interest from higher-end niche retailers looking to position themselves in secondary markets. While some of these retailers have entered the Memphis market, Memphis will certainly be on their target list of cities in the near and medium term.
Looking forward into 2017, CBRE Research estimates that construction deliveries will total more than 638,000 square feet. The Memphis retail market is not only growing well, but also continuing to have solid fundamentals for future growth.
— By Parrish Taylor, Vice President, CBRE. This article originally appeared in the March 2017 issue of Southeast Real Estate Business.