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Going to the Office: Greater Memphis Chamber puts a new focus on attracting office users

The following story was featured in Memphis Crossroads 2015 Summer Issue. To view the full magazine click here.

Memphis Office Space
 
Memphis beats Manhattan.
 
On what? Lease rates on office space. And it beats New York City by a long shot. It may seem an arcane contest to some but it’s a big deal to big companies with big office rents.  
 
Those companies are exactly the ones the Greater Memphis Chamber hopes to lure here with a great business environment and some of the lowest office lease rates in the country. The Chamber will soon launch a strategy to fill office space here with companies from across the country, asking them to give up the high rents of Manhattan (and Los Angeles, Boston, Chicago, San Francisco, and more) for the more-affordable Mid-South.
 
“We’ve always had a lot of success in recruiting logistic and distribution types of operations,” said Mark Herbison, the Chamber’s senior vice president of economic development. “In the last few years, we’ve had a lot of success in manufacturing. Where we’ve not seen a lot of growth is in the office sector.”


 
The move is about more than filling up buildings. It’s about expanding the economy and the city’s tax base. It’s about creating higher-paying jobs. Herbison said office jobs usually pay more than those at warehouses and factories. Also, tax yields on office property are usually higher, too. Both of these things expand the city’s bottom line.  
 
“You get more bang for your buck from a land use perspective in an office building,” said Steve Guinn, vice president Highwoods Properties. “The same goes for the City of Memphis. You get more property taxes per acre. You get more spending in a denser area. Office development is very compelling from that perspective.”
 
To get there, the Chamber will focus on companies who already have a presence in Memphis to see if there are opportunities to bring additional office operations to the city. The Chamber will also partner with the city’s biggest real estate firms and some other governmental agencies to identify target companies in the top 10 most expensive real estate markets in the country. They’ll look at those companies’ sales and employment projections and which ones have large blocks of office space. At first, they’ll identify companies that already have a logistic or manufacturing presence in Memphis.


 
“We’ll target those companies first and say we’ve already proven ourselves in regards to manufacturing and distribution, we’d love to have a chance to make the case for moving some of your headquarters or some of your back office functions to Memphis,” Herbison said. 
 
If these companies visit Memphis, they’ll have a lot to choose from. The city offers a total of more than 19.5 million square feet of office space. More than 5.5 million square feet of that total is in Class A space. Memphis consistently offers some of the lowest office lease rates of the major metro areas. The average price of all Memphis office space is $17.74. The average price of Class A space is $21.51. These rates are lower than regional peers like Atlanta, Chicago, Dallas, Richmond, and Austin.
   
Market reports from the city’s biggest commercial real estate firms show that the contest for office space here is heating up with only about 5 million square feet of vacant space. East Memphis continues to be the hottest spot for office space, especially Class A space. Creative firms are growing and heading Downtown and office construction projects in many submarkets are expected to be announced throughout the rest of 2015. 


 
Existing buildings in the Memphis market are ready for anything. If a company needs a call center, Memphis has buildings already set up for that. If a company needs a new headquarters, look no further than the former FedEx Corp. campus with three buildings and nearly 500,000 square feet of move-in ready space. There are beautiful spaces at suburban campuses like Goodlett Farms or Schilling Farms, one-of-a-kind spots in historic spaces Downtown, offices with data centers, offices with laboratories, offices close to the Memphis International Airport, “anything you want,” Herbison said.
 
“If you look at the market from a bigger, macro basis, we have got to grow, not only Highwoods, the whole place has got to grow,” Guinn said. “So, that’s why we’ve got to launch this program. We have to go out and make a compelling case for Memphis as a good office location.” 

Story by: Toby Sells
Photos by: Troy Glasgow
Posted: 11/17/2015 3:15:55 PM | with 0 comments
Filed under: Crossroads, Development, Economic, Herbison, Mark, Memphis, Office, Space, Strategy



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THE M BLOG
The latest news from the Greater Memphis Chamber. For more information, contact Director of Communications Christina Meek at (901) 543-3504 (cmeek@memphischamber.com) or Communications Specialist Jenny C. Fish at (901) 543-3558 (jfish@memphischamber.com).

 

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