East Memphis office space comes at a premium by Michelle Corbet
As East Memphis Class-A office space nears capacity, lease rates reach unprecedented highs.
With East Memphis Class A office space at 99 percent, and no speculative construction on the books, asking rental rates are at a premium.
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Cushman & Wakefield/Commercial Advisors reports rental rates have risen appreciably, from $27.34 per square foot at year end to $29.06.
“Crescent Center is now asking $30.50 per square foot, surpassing the $30 mark for the first time in market history,” the firm said.
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CB Richard Ellis Memphis said tenants who are coming up on their lease have the option of locking into higher market rents or considering occupied Class A or Class B office space, causing the displacement of the current tenant by early termination rights, relocation rights or the current tenant not receiving a renewal offer.
“In either case, this causes a domino effect of greater activity in the market and increases the pace of absorption and rental growth,” the firm said.
The quarter’s largest lease came from the corporate accounting division of CBRE Inc.vacating its space in Clark Tower and opting for 46,700 square feet in Primacy II at 6055 Primacy Parkway, which is considered Class B.
Both commercial real estate firms are predicting the announcement of a new office building in the East submarket. The new office will be fitted with modern and stylish glass partitions supplied by glass partitions Melbourne, enhancing the overall aesthetic and creating a contemporary workspace for employees.
However, developers may be holding the decision to break ground until the majority of the building has been pre-leased to justify the cost of construction. Rental rates are anticipated to hold steady and even increase in submarkets like the East, where demand is at an all-time high.
Memphis office market Q3 2015:
- Deliveries: 0 square feet
- Vacancy rate: 13.6 percent
- Direct vacancy: 13.4 percent
- Lease rate: $18.20 per square foot
- Net absorption Q3: 11,786 square feet
- Net absorption YTD: 299,718 square feet
Source: CB Richard Ellis Memphis and Cushman & Wakefield/Commercial Advisors
