Memphis, Tennessee, known as the “Home of the Blues,” is also emerging as a prime destination for commercial real estate (CRE) investment and tenant activity. As Tennessee’s second-largest city, Memphis has experienced a surge in business expansion and job growth, making it an attractive location for both tenants and investors.
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The Appeal of Memphis
Memphis offers a strategic geographical advantage with its location along the Mississippi River, serving as a major transportation and logistics hub. The city’s robust infrastructure, including the FedEx global headquarters, Memphis International Airport, and extensive interstate connections, positions it as a key player in the national and global supply chain.
- Population: Nearly 625,000 residents in the city and about 1.3 million in the metro area.
- Growth: Over 4% population growth since 2010, according to the U.S. Census.
- Key Areas: Includes municipalities like Southhaven, Bartlett, Germantown, and Collierville.
- Demographics: Median resident age is 36.9 years; per capita income is $35,527, and median household income is $64,008.
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Memphis Job Market
Memphis’ economy thrives on a diverse industrial base and strategic initiatives. The presence of major companies like GE Appliances and Ford Motor Company supports the advanced manufacturing sector. The healthcare industry, with giants like Humana and Norton Healthcare, further drives job growth.
- GDP: The GDP for the Memphis MSA is over $96 billion.
- Unemployment: The unemployment rate is 4.3% (January 2024).
- Key Industries: Healthcare, logistics, advanced manufacturing, and information technology.
- Major Employers: FedEx, ServiceMaster, International Paper, AutoZone, First Horizon National Corporation, St. Jude Children’s Research Hospital.
- Education: 32% of residents hold bachelor’s or post-graduate degrees. Major institutions include the University of Memphis and Rhodes College.
- Infrastructure: Major interstates (I-40, I-55), the Port of Memphis, and Memphis International Airport (MEM).
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Key Market Highlights
Industrial Real Estate
Memphis is often referred to as “America’s Distribution Center.” The industrial real estate market here is booming, driven by the city’s logistics capabilities. Industrial properties, such as warehouses and distribution centers, are in high demand, attracting significant investment from both national and international investors. The rise of e-commerce has further fueled this demand, making Memphis a critical hub for distribution networks.
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Market Overview (Cushman & Wakefield Q4 2023 Memphis Industrial Report):
- Inventory: 309,389,709 SF
- Vacancy Rate: 7.4%
- Absorption: 3,700,263 SF (2023)
- Key Leases: HUB Group, Belnick LLC, AmerisourceBergen, Victory Packaging
- Under Construction: 387,088 SF
- Largest Submarkets: Southeast, DeSoto County, Southwest
Crexi Insights:
- For Lease (Active):
- Asking Rate/SqFt (Median): $8 per year
- Median SqFt/Listing: 21,800
- Days on Market: 341
- Total Listings on Crexi: 158 spaces
- For Sale (Active):
- Median Asking Price: $899,000
- Price/SqFt: $68
- Asking Cap Rate: 9.0%
- Days on Market: 187
- Total Listings on Crexi: 37
- Sales Comps (Past 12 Months):
- Median Sold Price: $650,000
- Sold Price/SqFt: $37
- Total Sales Volume: $189 million
- Sold Cap Rate: 8.0%
- Median SqFt Sold/Transaction: 16,300
- Total SqFt Sold: 4.34 million
- Days on Market (Median): 77
Office Space
The Memphis office market is showing resilience and recovery, with increased occupancy levels and rising average asking rental rates for Class A office spaces. This suggests growing confidence among landlords and investors in the office sector.
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Market Overview (CBRE Memphis Office Figures Report Q4 2023):
- Inventory: 21,882,283 SF
- Vacancy Rate: 16.1%
- Net Absorption: -34,420 SF (2023)
- Key Leases: Inventory Locator Service, Allen & Hoshall, Adams & Reese, Par-Cou
- Largest Submarkets: East, 385 Corridor, Downtown
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Crexi Insights:
- For Lease (Active):
- Asking Rate/SqFt (Median): $19 per year
- Median SqFt/Listing: 1,712 SF
- Days on Market: 383
- Total Listings on Crexi: 633 spaces
- For Sale (Active):
- Median Asking Price: $782,000
- Price/SqFt: $105
- Asking Cap Rate: 7.0%
- Days on Market: 171
- Total Listings on Crexi: 45
- Sales Comps (Past 12 Months):
- Median Sold Price: $445,000
- Sold Price/SqFt: $92
- Total Sales Volume: $101 million
- Sold Cap Rate: 9.4%
- Median SqFt Sold/Transaction: 5,487 SF
- Days on Market (Median): 137
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Retail Market
The Memphis retail market is thriving, with significant net absorption and the addition of new retail space. The vacancy rate is at a record low, and the increase in rental rates coupled with high transaction volumes reflects a healthy and active market.
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Market Overview (Cushman & Wakefield Q4 2023 U.S. Shopping Center MarketBeat):
- Inventory: 38,161,706 SF
- Vacancy Rate: 5.0%
- Net Absorption: -31,419 SF (2023)
- Under Construction: 69,370 SF
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Crexi Insights:
- For Lease (Active):
- Asking Rate/SqFt (Median): $11 per year
- Median SqFt/Listing: 2,709 SF
- Days on Market: 385
- Total Listings on Crexi: 597 spaces
- For Sale (Active):
- Median Asking Price: $1.3 million
- Price/SqFt: $156
- Asking Cap Rate: 6.8%
- Days on Market: 155
- Total Listings on Crexi: 104
- Sales Comps (Past 12 Months):
- Median Sold Price: $445,000
- Sold Price/SqFt: $94
- Total Sales Volume: $243 million
- Sold Cap Rate: 6.0%
- Median SqFt Sold/Transaction: 4,800 SF
- Days on Market (Median): 83
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Multifamily Market
The multifamily market in Memphis has remained stable despite national trends, maintaining steady average rental rates. The market remains resilient, especially in the face of compressed sales activity due to high capital costs.
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Market Overview (CBRE Memphis Multifamily Figures Q4 2023):
- Total Housing Units: 574,616
- Multi-Unit Inventory: 132,162 units
- Vacancy Rate: 7.8%
- Average Rent per Unit: $1,223
- Absorption: -110
- Under Construction: 2,023 units
- Most Active Submarkets: Germantown/Collierville, East Memphis, Downtown Memphis
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Crexi Insights:
- For Sale (Active):
- Median Asking Price: $1.5 million
- Price/SqFt: $94
- Price/Unit: $87,000
- Asking Cap Rate: 7.7%
- Days on Market: 215
- Total Listings on Crexi: 33
- Sales Comps (Past 12 Months):
- Median Sold Price: $160,000
- Sold Price/SqFt: $73
- Sold Price/Unit: $62,500
- Total Sales Volume: $216 million
- Sold Cap Rate: 8.0%
- Total SqFt Sold: 2.16 million
- Days on Market (Median): 197
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Conclusion
Memphis is a city where Southern charm meets urban dynamism, making it a prime location for commercial real estate investment. With its strategic location, robust infrastructure, and diverse economy, Memphis offers numerous opportunities for investors and businesses alike. Whether it’s industrial, office, retail, or multifamily properties, Memphis has something to offer.
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