Memphis’ commercial real estate market stayed on track in the third quarter, according to
Cushman & Wakefield | Commercial Advisors’ commercial real estate report.
In the office sector, net leasing activity was negative – by 8,710 square feet – but remained positive year-to-date by 36,212 square feet.
Industrial momentum continued in third quarter. Absorption, or the net change in physically occupied space, in the industrial sector reached nearly 1 million square feet in the third quarter and topped 1.6 million square feet for the year, according to Cushman & Wakefield | Commercial Advisors data.
Commercial real estate activity can provide a glimpse into economic conditions. A healthy real estate market signifies that companies are expanding, adding employees and square footage.
Conversely, a depressed real estate market can spell economic trouble. Companies vacating office space or downsizing may mean more unemployed workers and lower rents.
New investments are being made in the Memphis region. The Economic Development Growth Engine of Memphis and Shelby County approved five tax incentive packages – commonly referred to as PILOTs – in the first three quarters of 2014. Those PILOTs combined will create 520 new jobs and represent an investment of nearly $330 million.
In October alone, EDGE approved three more PILOT applications that represent an investment of $24 million and will bring 272 new jobs: FedEx Supply Chain Solutions, which will add 87 jobs; ACS Clothing, adding 125; and Benchmark Education, adding 60.
Year-over-year, leasing activity in the office sector grew by 23 percent. Vacancy rates have gone down in 2014 while asking rental rates have gone up. In the East Memphis Class A office market, rental rates surpassed the $25 mark for the first time since 2010. The industrial sector showed the same positive trends in terms of vacancy and rents.
The outlook for the fourth quarter remains optimistic. Users looking for office space collectively need about 456,000 square feet, while the pipeline for industrial activity is hovering around 10 million square feet.
By Jane A. Donahoe
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