TUPELO – If you think a commercial building boom is underway in the All-America City, you’re on the money.
Nearly $260 million worth in fact.
The past two years in particular have seen a boost in commercial projects, with more than 4,000 permits valued at $118 million getting the OK from the city’s Development Services department.
Clay Short, who oversees commercial real estate for real estate company TRI Inc., said the Great Recession is in the distant past and businesses are again looking to expand.
“Lending has loosened up some, interest rates are still historically low and retail sales have recovered, which is triggering expansion by retailers into new markets,” he said.
In 2014, Rouse Properties, a New York-based real estate investment trust, bought a majority stake in the largest retail shopping center in the region – the 833,000-square-foot The Mall at Barnes Crossing. It has begun renovations to the interior, is adding new tenants and will eventually refurbish the exterior.
While the value of the transaction wasn’t disclosed, the company – which has 35 malls in 21 states –clearly sees potential in the mall, which opened in 1990.
Real estate developer Tommy Morgan says Tupelo’s status as the retail, financial and medical hub of Northeast Mississippi has a ripple effect.
“We’re blessed to be regional hub,” he said. “Our area, our people, the work ethic here, all play into industry recruitment, and when you have people and jobs it plays into retail and residential.”
At least six retail shopping projects are either under construction or in the development phase in the city. Among the projects are:
• Tupelo Crossroads – The development at the southwest corner of Barnes Crossing Road and North Gloster Street covers about five acres. The preliminary site plan has two buildings on the property, and some of the land is pegged for future development.
Available spaces range from 2,500 square feet to 3,500 square feet and parcels available range from 1.02 to 1.16 acres.
• WestPark – Justin Davis, who heads development partner Southern Retail Properties LLC, said interest is growing in the proposed development, which occupies the former Block Corp. warehouse on West Main Street across from Ballard Park.
Retailers and restaurants are being recruited to the site.
The latest site plan shows 10 available lots ranging in size from 0.4 acres to 2.55 acres. Another 7 acres adjoining Air Park Road could be used for future development.
About a third of the building – which was the headquarters for Hancock Fabrics until 2004 before it was used by Block Corp. – closest to Main Street is being demolished. Nearly 330,000 square feet of warehouse space remains separate from the commercial lots and would be accessed from Air Park Road.
• The Market Center. Located at the corner of West Jackson Street and Coley Boulevard across from the Tupelo Furniture Market, the 21,000-square-foot retail center will soon be home to Core Cycle + Outdoor, an AT&T store and Gilpin Dry Cleaners. A salon, nail shop and a restaurant also are slated to open at the retail center.
The Market Center is owned by developer and Tupelo Furniture Market owner and chairman V.M. Cleveland.
• Cleveland also owns another building on North Gloster Street at the former home of Magnolia Bingo. That building was heavily damaged by the April 2014 tornado, but it has been rebuilt. One tenant, Planet Fitness, recently opened in the 24,000-square-foot building.
• Across the street, a 10,000-square-foot retail center has opened, anchored by Ouch! Urgent Care and Scarlet’s Donuts. The center, built by Dan Ballard, replaced a 15,000-square-foot building destroyed by the 2014 tornado.
• Farther north on North Gloster, in the Tupelo Commons retail development, Cleveland also is attracting interest.
“The building with Bargain Hunt we’ve expanded twice, and we just poured the pad on another 15,000-square-foot expansion,” Cleveland said. “The buildings behind Malco are 90 percent occupied. ... there’s a lot of activity going on around Tupelo.”
Is Tupelo overbuilt?
But with all the new construction underway or planned, is Tupelo being overbuilt? After all, there still is commercial space available.
Developers say finding the “right” space is the key.
“There’s no concern of overbuilding because most gooddevelopers don’t begin the construction process until they get a signed lease, or a significant portion of their project leased,” Short said. “If the tenant is upgrading space, then it leaves behind a space which either typically won’t generate the same rate, or the landlord has to spend money on preparing the space for the next user. Either way it makes it easier for the replacement tenant to get a better deal at a lower rate. That dynamic provides space for the strong tenant who might not be able to pay for ‘new’ space.”
Davis says Tupelo is well-positioned for more growth. Even though the stock market has taken a beating in recent weeks, the overall economy seems to be holding steady overall, with relatively high growth in the Southeast.
“As we came out of the recession, consumers began spending again and then retailers then gained confidence in growing and adapting their store base to different spending patterns,” Davis said. “Notwithstanding that macro level trends, the current economy in Northeast Mississippi seems to be very strong and a great accelerator of growth in our area.”
And others see value in the retail market in Tupelo, with several shopping centers sold to out-of-state firms.
Last August, a private investor from Atlanta pad $8.725 million for the 75,000-square foot Shops at Barnes Crossing. The center, built in 2005, is home to Bed Bath & Beyond, Dollar Tree, David’s Bridal, Dickey’s Barbecue and Margarita’s.
A year earlier, the Cross Creek Shopping Center, anchored by Home Depot and PetSmart, was sold to Texas-based Albanese Courmier Holdings for an undisclosed sum.
Barnes Crossing Plaza, which sits on Mall Drive near The Mall at Barnes Crossing, was sold in January 2014 for an undisclosed price to California-based Columbus Pacific Properties. The 157,700-square-foot center is home to Toys R Us, OfficeMax, Hobby Lobby, T.J. Maxx, ATC Fitness, Hut No. 8 and Burkes Outlet.
Local developers say it’s a clear sign of growth in Tupelo and Lee County, as retail sales hover near $2 billion a year.
Morgan also doesn’t think Tupelo is being overbuilt.
“It’s all about growth,” he said. “The competition sees others doing well. If they see a market they think they’ll do well in, retail will seek it out no matter where it is.”
Davis said he sees little speculative space being built.
“Supply lagged behind demand due to reaction time, so it’s just a natural market growth,” Davis said.
And he says the old real estate mantra of “location, location, location” does have its merits.
“Providing the ‘right’ space is definitely a way to be most efficient with development and overall growth,” he said. “Sometimes, a market isn’t so much overbuilt as it is under-demolished. Markets, and corridors within a market, can take on bad reputation if too much of its commercial real estate is trying to survive well past its useful life.”