VOL. 132 | NO. 207 | Wednesday, October 18, 2017
By Patrick Lantrip
Despite a growing trend of major businesses relocating Downtown, the East submarket still led the way by a large margin in office leasing volume in the third quarter.
In total, the Memphis office market absorbed 156,280 square feet of space, which marks the third consecutive quarter of positive absorption, according to Cushman & Wakefield/Commercial Advisors’ Q3 Office MarketBeat report. This brings the year-to-date net absorption to 625,707 square feet, a drastic increase from the negative 59,344 square feet absorbed in the first three quarters a year ago.
In terms of leasing activity, companies in the Memphis market inked a total of 317,562 square feet, with 177,080 square feet in the East submarket alone.
Leading the way in the East was a trio of law firms that all inked deals over 15,000 square feet this past quarter, including Evans & Petree’s 24,000 square feet in the Renaissance Center; Harris Shelton Hanover Walsh’s 22,581 square feet in Lakecrest, and Wyatt, Tarrant & Combs’ 15,000 square feet in the Triad Center III.
Other notable leases signed this quarter were Advertising Checking Bureau’s 36,250 square feet in Shelby Oaks Complex III – the largest of the quarter – and Wunderlich Securities’ 28,716 square feet at One Commerce Square Downtown.
The latter, perhaps, is the most significant because Wunderlich Securities joins a growing list of companies choosing to leave East Memphis for greener pastures in the city’s urban center.
“ServiceMaster is obviously the huge one, but Wunderlich is moving from East Memphis to Downtown, and SouthernSun (Asset Management) is renovating a building and moving their headquarters Downtown,” CW/CA principal Matt Weathersby said. “That’s three major companies moving from East Memphis to Downtown, and I don’t know if there have been three in the last decade.”
Additionally this quarter, Orion Federal Credit Union agreed to relocate and expand its corporate headquarters into 75,000 square feet in the new $70 million Wonder Bread Bakery project that Development Services Group announced this quarter.
In addition to injecting 150,000 square feet of office space into the Downtown market, the bakery development will include 286 apartment units and a 480-vehicle parking garage.
“The mixed-use aspect of the project is expected to contribute to the overall economic and social vibrancy of the neighborhood, making it an excellent location for office tenants with a strong focus on corporate social responsibility and community building as well as those seeking to attract millennial talent,” CW/CA senior research associate Lauren Goddard wrote in the MarketBeat report.
As these companies begin to vacate their current locations, and with the addition of two new office buildings, upward pressure on office vacancy rates, particularly in the East submarket, is expected, according to the report.
“East Memphis today is still really tight, but I think there is going to be more space available as we look out three to six months from now as there is today, so there is going to be a little bit of a change in the wind on availability as you look at East Memphis,” Weathersby said.