By: Brittney Gathen
The Memphis real estate market is undergoing a noticeable come up. Since 2014, $19 billion has been invested in planned, underway or completed projects.
Whether it’s a $1.1 billion development plan for Downtown Memphis’ Pinch District, a $3.8 million incentive to redevelop a vacant Midtown property into apartments, a $280 million modernization project for Methodist University Hospital in the Medical District, a project to transform the former American Snuff Co. Plant into a mixed-use space in Uptown or planning to use millions of dollars to improve areas like New Chicago, Memphis real estate is on the move.
Interested in learning more about what makes the Memphis market unique and how you can dive in? See what these young real estate pros had to say about the city’s boom.
Brent Hooks, chief administrative officer at Allworld Project Management, said that investing can be an important wealth builder for millennials.
“There are cash flow, tax, leverage and appreciation benefits that are generated through investing in real estate,” Hooks said. “The commercial real estate market in Memphis is currently an open canvas, and due to recent activity, is picking up momentum. Other markets are more developed, which limits their level of further development. Memphis has competitive property values when compared to other markets. There are several underdeveloped pockets of transitioning areas. Major projects are on the horizon. Through the use of Memphis 3.0, the community is starting to develop a long-term vision. With major developments on the horizon such as South City, Union Row, One Beale, micro-projects will develop to connect larger developments.”
Casey Flannery, a senior associate at Cushman & Wakefield Commercial Advisors, said that opportunities and affordability make the market appealing.
“Companies are willing to relocate and add jobs to the area, in addition to (the city’s) more reasonable lease rates. For example, office rates in Atlanta are $34.00 per square foot, as opposed to our $18.00 per square foot rates,” Flannery said. “Memphis has a lot of opportunity for redevelopment and new development.”
Hooks said that specificity is key in getting involved in real estate.
“The real estate industry is very competitive, and it is not a get rich quick scheme,” Hooks said. “Determine your specific strategy, and identify your risk threshold. Have a clear value-add proposition. Start small, work with experienced mentors and build a good understanding of the market. Evaluate as many properties as possible, and have a good knowledge of your calculations. Terms like CAP rate, Net Operating Income and cash flow should be well comprehended.”
Hooks also recommends connecting with organizations such as the Memphis Investors Group and the Urban Land Institute for training and resources.
Benjamin Orgel, an asset manager at Tower Ventures, said that being hands-on is important.
“It’s always good to have programs, but it’s also important to have entrepreneurial-minded people who go out and try to improve for themselves,” Orgel said. “I think (it’s about) getting your feet in the fire and surrounding yourself with the right people…people who know what they’re doing, and saying ‘How can I get involved?’ Surround yourself with people smarter than you.”
Reimagining and Rebuilding
One area of development in the city has been the adaptive reuse of old buildings. Examples include the Crosstown Concourse–a former Sears facility transformed into a space for small businesses, nonprofits and Crosstown High–as well as the Rise Apartments, which were once an old Wonder Bread factory.
Orgel, who is involved in a project to transform the former American Snuff Co. Plant into a mixed-use space, said that adaptive redevelopment sets the Memphis market apart.
“If you go to some other cities, they tear down everything and build tall, steel skyscrapers,” Orgel said. “There’s nothing cooler to me than taking an historic building that’s been there for a hundred plus years, or less, and making it a wonderful place for someone to live, work or play…I think Memphis has done an amazing job with local investors here that, instead of tearing down, we take old buildings and convert them.”
(Re)Shaping the City
Flannery said that commercial investing and development in Memphis can influence how people view the city and potential opportunities.
“When there are people who are investing in the city and putting money into redevelopment, it displays the confidence that others, and citizens, have in our community,” Flannery said. “They (citizens and investors) are willing to support the city, initiatives and participate in events locally. It brings money to our city with more people living, working and spending money in the area.”
Orgel said that development can help arouse more interest in the city.
“If more millennials get involved in real estate and investing, it makes you more passionate about the city, makes you think differently about the city and it makes you want to invest more and more to improve it,” Orgel said. “The more people that are successful here, especially in real estate, improves everything in the city. Like anything in life, the more you put into it, the more you’ll get out of it.”
Hooks said that development can increase Memphis pride.
“As we move deeper into the digital age and smart cities rise, millennial involvement is needed in commercial development and investing,” Hooks said. “We can bring fresh ideas that the generations before us may not have considered. Ideas like co-working spaces will mostly increase. The accessibility spurs an entrepreneurial interest because of the cost-effectiveness. Furthermore, We can shape the future of the city for our friends and family. This would also strengthen the sense of pride among our peer group. There is no better feeling than saying, ‘Hey, my friend helped develop that site!’”