By Robbie Ward
TUPELO – Steady, picking up, off and on again – these are some of the adjectives used to describe the commercial real estate market for Tupelo, Lee County and the surrounding area.
Commercial real estate professionals in Northeast Mississippi say the current market follows national trends of slow, steady recovery in the third quarter of this year.
International real estate services company CBRE Group Inc. reported commercial real estate slowly improving throughout the nation for the period of July to September, with decreases in vacancy rates for office, industrial and retail markets compared to the previous quarter.
Nationally, the office vacancy rate dropped 0.2 percent to 15.1 percent. The industrial real estate vacancy rate was 11.7 percent, decreasing 0.3 percent from the previous quarter, continuing a pattern of 13 consecutive quarters of falling vacancy rates.
Retail markets showed vacancy rates at 12.2 percent, the same as last quarter. Early data of vacancy rates for professionally managed apartments remained flat at 4.6 percent.
In Tupelo and Lee County, the largest commercial hub for Northeast Mississippi, commercial real estate brokers and property managers gave mixed signs, but cited overall improvement from recent years.
No formal quarterly data is maintained for Tupelo and the surrounding area for commercial real estate.
With populations of about 35,000 and 85,000 respectively, Tupelo and Lee County is a regional trade hub of around 350,000.
Located more than 100 miles from metropolitan Memphis and 136 miles from Birmingham, Tupelo’s commercial real estate competition comes from communities of more comparable population sizes like Hattiesburg, DeSoto County communities and Jackson, Tenn., area commercial real estate professionals say.
Tommy Morgan, owner of Tommy Morgan Realtors, said his agency recently has seen interest from national chains and “mom and pop”-type businesses – mostly retail businesses and restaurants – that want to open in Tupelo and surrounding areas, something that had slowed in recent years.
While the recent Great Recession officially lasted from 2007-2009, according to the Bureau of Labor Statistics, many parts of the country have yet to return to pre-recession activity.
Northeast Mississippi has seen improvements as well, but gains are tempered with some businesses closing. Morgan said the commercial real estate market seems to be “holding steady with a little improvement.”
Generally, Morgan said his company has had more businesses doing more than inquiring.
“They’re doing business,” he said. “We’re seeing triggers pulled now.”
Clay Short, a commercial real estate broker for TRI Realty who heads the company’s commercial realty work, agrees that Tupelo and the surrounding area continue to overlap with national trends of slow but continued growth.
“But I’d describe it as inconsistent,” he said. “We’ll be really busy for a week or two and things will slow down a great bit.”
Short said a trend he’s noticed recently is that more commercial companies tend to be more interested in leasing than buying property. He thinks that stems from businesses wary of cautious consumer confidence.
Among his properties seeking companies to lease, is a 7,500-square-foot building marketed for retail and service companies on McCullough Boulevard in front of the Mill at McCullough luxury apartment complex that opened earlier this year. The retail center already has one tenant, and Short said he is in the process of landing a restaurant.
“Space is still available,” Short said. “We have plans for a phase two.”
Jeff Snyder,general manager of The Mall at Barnes Crossing and the nearby Barnes Crossing Market Center (which houses Old Navy, Gap Factory Outlet and others), said vacancy rates typically run in the 10 percent range for the mall. With sales and foot traffic at the mall increasing each year since it opened 23 years ago, Snyder said he and other staff at the mall work to find the right balance of stores among the 90 at the mall, which includes 12 different types of retailers.
“We try to find quality retailers that our customers are going to Memphis, Birmingham or shopping online for now,” Snyder said. “It’s a constant search for the right retailers.”
As with any large real estate property with an influx of leases, Snyder said mall staff always work to balance keeping retailers customers want with adding something different.
“We’ll have some announcements after the first of the year,” he said. “When leases expire from time-to-time, you have to break up with some. You can’t be with them forever.”