WALMART SHADOW ANCHORED SHOPPING CENTERimages3.loopnet.com/d2/ydmqEPBMx83gF8O4VNN9lcTiWnH1aI2C6JjAfg6bcp… · WALMART SHADOW ANCHORED SHOPPING CENTER # EXECUTIVE SUMMARY OFFERING

SUBJECT

PROPERTY

WALMART SHADOW ANCHORED SHOPPING CENTER230 Collonade Plaza, Senatobia, MS 38668

OFFERING MEMORANDUM

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N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E

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be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other

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provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of

interest in the subject property. The information contained herein is not a substitute for a thorough due diligence

investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with

respect to the income or expenses for the subject property, the future projected financial performance of the

property, the size and square footage of the property and improvements, the presence or absence of contaminating

substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the

improvements thereon, or the financial condition or business prospects of any tenant, or any tenant's plans or

intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure

has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not

verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding

these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the

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TABLE OF CONTENTS

WALMART SHADOW ANCHORED SHOPPING CENTER

INVESTMENT OVERVIEWSection 1•

FINANCIAL ANALYSISSection 2•

MARKET OVERVIEWSection 3•


4

INVESTMENT

OVERVIEW

#

OFFERING SUMMARY

INVESTMENT OVERVIEW

5


▪ Walmart Shadow Anchored Shopping Center | Memphis, TN MSA

▪ Seven Percent or 1,200-Square Feet of Vacancy Upside

▪ Long-Term Historical Occupancy by Majority of Tenants

▪ Ten Percent Population Growth Since 2000 in Seven-Miles

▪ Located 40-Miles South of Memphis | Largest City in Tennessee

INVESTMENT HIGHLIGHTS

Marcus & Millichap is please to bring to market Collonade Plaza, a Walmart Shadow Anchored Shopping Center comprised of

17,700-square feet in Senatobia, Mississippi. Senatobia is a county seat of Tate County and located less than 30 miles south of

downtown Memphis, Tennessee – the largest city in Tennessee and 23rd largest in the nation. The center was constructed in 1996

and positioned on approximately 1.70 acres with multiple points of ingress and egress with exceptional signage and visibility.

Collonade Plaza is currently 93 percent leased with 1,200-square feet of realizable vacancy upside. Leasing up this vacant unit at

market rents could potentially add another $15,000 to the NOI. Additionally, all of the current tenants are under gross leases which

upon expiration could eventually be converted to triple-net. The tenant base consists of a complimentary mix of tenants that supplies

the city’s consumers with a wide range of products and services to meet the needs of its residents. The majority of these needs are

internet resistant and include restaurants, insurance, communication, clothing, beauty products and a barber.

This Walmart Shadow Anchored Shopping Center benefits from being positioned along US-51 (Panola Street), a four-lane

thoroughfare with a center turn lane near Norfleet Drive, when combined sees around 25,000 vehicles per day. Along with the

Walmart Supercenter, additional traffic drivers within the corridor include retail, education, medical and some industrial which all pull

consumers to or around the subject property. It neighbors both Northwest Mississippi Community College with 7,100 students and

Senatobia High School with 750 students. There are more than 11,500 employees within three-miles and just over 16,000 within

seven-miles of the center which shows the employment density surrounding the subject property.

Strong historical occupancy, vacancy upside and a prominent location within a growing market provides Collonade Plaza the ability to

continue to be an integral part of the community and should continue to serve as an invaluable shopping destination for residents and

travelers alike.

PROPERTY PHOTOS

6


PROPERTY PHOTOS

7


PROPERTY PHOTOS

8


Covered Walk Through SITE PLAN

9


Step

’nSt

yle

Yam

ato

Hib

ach

i &

Sush

i

Ph

on

es R

US

Bea

uti

ful N

ails

Par

ty S

tore

C & C Beauty

1st Franklin Financial

A Cut Above

Vac

ant

1,2

00

SF

Direct Insurance

Munchies

Vacant Unit (1,200 SF) Pylon Sign

SUBJECT PROPERTY

EmployeesCalbee – 200

Carlisle Syntec – 100PKUSA - 25

CromecraftFurniture

180 Employees

Aluminum Extrusions 225 EmployeesR R Donnelley 395 Employees

Northwest Mississippi Community College 7,100

Students

Magnolia Heights 3K - 12

725 Students

Senatobia Elementary &

Middle Schools 1,029 Students

Senatobia High School

750 Students

North Oak Regional Medical Center140 Employees

Main Street 13,000 VPDSenatobia Plaza

85,000 SF

#

LOCAL AERIAL

10


#

LOCAL MAP

11

Memphis

Senatobia

Holly Springs

Collierville

Olive Branch

Marianna

Forrest City

South Haven

Oxford

Batesville


Senatobia to Memphis30 Miles

#

REGIONAL MAP

12

Senatobia

Memphis

Birmingham

Huntsville

Nashville

Atlanta

Jackson

MontgomeryShreveport

Little Rock



13

FINANCIAL

ANALYSIS


#

EXECUTIVE SUMMARY

OFFERING SUMMARY

14

THE OFFERING

Property Walmart Shadow Anchored Shopping Center

Property Address 230 Collonade Plaza, Senatobia, MS 38668

SITE DESCRIPTION

Built 1996

Gross Leasable Area 17,700 SF

Current Occupancy 93.22%

Lot Size +/- 1.7 Acre(s)

Ownership Fee Simple

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MAJOR EMPLOYERS

EMPLOYER# OF

EMPLOYEES

S & J Trucking 662

R R Donnelley 395

Northwest Miss Community College 353

Baddour Memorial Center Inc 315

Walmart 300

AT&T 282

Calbee North America LLC 200

Kaye Grocery Holdings Inc 193

Chromcraft Furniture 180

North Oak Regional Hospital Inc 140

North Oak Regional Center 120

Senatobia Convalescent Center 120

DEMOGRAPHICS

3-Miles 5-Miles 7-Miles

2016 Estimate Pop 8,311 13,382 16,668

2010 Census Pop 8,640 13,899 17,314

2016 Estimate HH 2,604 4,412 5,621

2010 Census HH 2,734 4,610 5,868

Average HH Income $55,197 $56,768 $55,889

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FINANCIAL ANALYSIS


15

TENANT SUMMARY

Tenant Name Square

Feet

%

Bldg

Share

Lease DatesAnnual

Rent per

Sq. Ft.

Total Rent

Per Month

Total Rent

Per Year

Lease

TypeComm. Exp.

Step’n Style Menswear 2,400 13.56% 07/01/2012 MTM $8.80 $1,760 $21,120 Gross

Yamato Sushi & Steakhouse 2,400 13.56% 06/01/2014 05/30/2018 $8.40 $1,680 $20,160 Gross

Phones R Us 1,200 6.78% 03/01/2014 MTM $12.80 $1,280 $15,360 Gross

Beautiful Nails 1,200 6.78% 01/01/2000 12/31/2018 $12.80 $1,280 $15,360 Gross

Party Store 1,200 6.78% 04/01/2017 03/31/2018 $10.80 $1,080 $12,960 Gross

C & C Beauty Supply 3,960 22.37% 07/01/2006 06/30/2019 $9.03 $2,980 $35,760 Gross

First Franklin Financial 1,320 7.46% 03/01/2004 02/28/2019 $11.82 $1,300 $15,600 Gross

A Cut Above 1,320 7.46% 02/01/2005 MTM $11.45 $1,260 $15,120 Gross

Munchies (Coffee/ Ice Cream)* 750 4.24% TBD 3 Years $12.00 $1,280 $15,360 Gross

Direct Auto & Life Insurance 750 4.24% 10/01/2007 09/30/2019 $14.40 $900 $10,800 Gross

Vacant 1,200 6.78%

Total Occupied 16,500 93.22%

Total Vacant 1,200 6.78%

Total 17,700 100.00% $14,800 $177,600

* Munchies Lease is Pending

FINANCIAL ANALYSIS


PRICING DETAIL

16

Operating Data Current

Scheduled Base Rental Income $177,600

Expense Reimbursement Income

CAM $0

Insurance $0

Real Estate Taxes $0

Management $0

Total Reimbursement Income $0

Effective Gross Revenue $177,600

Less: Operating Expenses ($55,173)

Net Operating Income $122,427

Debt Service ($72,536)

Net Cash Flow After Debt Service 13.76% $49,891

Principal Reduction $24,092

Total Return 20.41% $73,983

Operating Expenses Current Per/SF

(CA

M) Utilities $4,806 $0.27

General Repairs $696 $0.04

General Maintenance $3,430 $0.19

Total CAM $8,932 $0.50

2016 Insurance Premiums $9,389 $0.53

2017 Real Estate Taxes $27,048 $1.53

Management Fee (4.0% of EGR) $7,104 $0.40

Reserves $2,700 $0.15

Total Expenses $55,173 $3.12

PRICING & FINANCING

Price $1,450,000

Cap Rate | Price/SF 8.44% | $82

Net Operating Income $122,427

Loan Type Proposed New

Down Payment 25% / $362,500

Loan Amount $1,087,500

Interest Rate / Amortization 4.50% / 25 Years

Debt Coverage Ratio 1.70


17

MARKET

OVERVIEW

PROPERTY NAME

CITY OF SENATOBIA

18


Source: http://www.cityofsenatobia.com/TCEDF.htm

8


DEMOGRAPHICS

19

COLLONADE PLAZA

3 Miles

5 Miles

7 Miles

PROPERTY NAME

MARKETING TEAM


DEMOGRAPHICS

Source: © 2016 Experian

Created on August 2017

POPULATION 3 Miles 5 Miles 7 Miles

▪ 2021 Projection

Total Population 8,633 13,966 17,404

▪ 2016 Estimate


▪ 2010 Census


▪ 2000 Census


▪ Current Daytime Population

2016 Estimate 11,524 14,758 16,316

HOUSEHOLDS 3 Miles 5 Miles 7 Miles

▪ 2021 Projection

Total Households 2,721 4,630 5,901

▪ 2016 Estimate


Average (Mean) Household Size 2.71 2.73 2.73

▪ 2010 Census


▪ 2000 Census


▪ Occupied Units

2021 Projection 2,721 4,630 5,901

2016 Estimate 2,959 5,011 6,396

HOUSEHOLDS BY INCOME 3 Miles 5 Miles 7 Miles

▪ 2016 Estimate

$150,000 or More 3.19% 4.39% 4.08%

$100,000 - $149,000 7.92% 8.06% 7.85%

$75,000 - $99,999 8.95% 9.31% 9.42%

$50,000 - $74,999 19.81% 18.39% 18.45%

$35,000 - $49,999 14.53% 15.14% 15.22%

Under $35,000 44.38% 43.67% 43.93%

Average Household Income $55,197 $56,768 $55,889

Median Household Income $40,512 $40,142 $40,054

Per Capita Income $18,368 $19,441 $19,458

HOUSEHOLDS BY EXPENDITURE 3 Miles 5 Miles 7 Miles

Total Average Household Retail Expenditure

$57,472 $58,192 $57,738

▪ Consumer Expenditure Top 10 Categories

Housing $15,532 $15,776 $15,673

Transportation $11,033 $11,132 $11,035

Shelter $8,637 $8,747 $8,669

Food $6,229 $6,233 $6,192

Personal Insurance and Pensions $4,948 $5,073 $4,985

Utilities $4,067 $4,134 $4,126

Health Care $3,774 $3,889 $3,909

Entertainment $2,456 $2,499 $2,487

Cash Contributions $1,598 $1,680 $1,685

Apparel $1,526 $1,558 $1,541

POPULATION PROFILE 3 Miles 5 Miles 7 Miles

▪ Population By Age

2016 Estimate Total Population 8,311 13,382 16,668

Under 20 32.53% 30.30% 29.42%

20 to 34 Years 22.38% 20.79% 20.17%

35 to 39 Years 5.41% 5.51% 5.51%

40 to 49 Years 10.77% 11.59% 11.84%

50 to 64 Years 16.24% 18.13% 18.97%

Age 65+ 12.68% 13.71% 14.10%

Median Age 30.94 34.09 35.37

▪ Population 25+ by Education Level

2016 Estimate Population Age 25+ 4,745 8,149 10,389

Elementary (0-8) 4.05% 4.10% 4.37%

Some High School (9-11) 11.08% 10.94% 11.09%

High School Graduate (12) 27.25% 29.30% 30.09%

Some College (13-15) 23.55% 24.17% 24.01%

Associate Degree Only 8.71% 9.11% 9.51%

Bachelors Degree Only 16.17% 14.53% 13.61%

Graduate Degree 7.75% 6.06% 5.50%

20

Income

In 2016, the median household income for your selected geography is

$40,118, compare this to the US average which is currently $54,505.

The median household income for your area has changed by 9.34%

since 2000. It is estimated that the median household income in your

area will be $44,465 five years from now, which represents a change

of 10.84% from the current year.

The current year per capita income in your area is $19,453, compare

this to the US average, which is $29,962. The current year average

household income in your area is $55,920, compare this to the US

average which is $78,425.

Population

In 2016, the population in your selected geography is 16,622. The

population has changed by 9.65% since 2000. It is estimated that the

population in your area will be 17,361 five years from now, which

represents a change of 4.45% from the current year. The current

population is 47.85% male and 52.15% female. The median age of

the population in your area is 35.35, compare this to the US average

which is 37.68. The population density in your area is 107.95 people

per square mile.

Households

There are currently 5,601 households in your selected geography. The

number of households has changed by 9.37% since 2000. It is

estimated that the number of households in your area will be 5,881

five years from now, which represents a change of 5.00% from the

current year. The average household size in your area is 2.73 persons.

Employment

In 2016, there are 16,316 employees in your selected area, this is also

known as the daytime population. The 2000 Census revealed that

49.74% of employees are employed in white-collar occupations in

this geography, and 51.06% are employed in blue-collar occupations.

In 2016, unemployment in this area is 9.69%. In 2000, the average

time traveled to work was 26.00 minutes.

Race and Ethnicity

The current year racial makeup of your selected area is as follows:

59.72% White, 36.96% Black, 0.07% Native American and 0.40%

Asian/Pacific Islander. Compare these to US averages which are:

70.77% White, 12.80% Black, 0.19% Native American and 5.36%

Asian/Pacific Islander. People of Hispanic origin are counted

independently of race.

People of Hispanic origin make up 2.58% of the current year

population in your selected area. Compare this to the US average of

17.65%.

PROPERTY NAME

MARKETING TEAM

WALMART SHADOW ANCHORED

Housing

The median housing value in your area was $113,697 in 2016,

compare this to the US average of $187,181. In 2000, there were

3,738 owner occupied housing units in your area and there were

1,383 renter occupied housing units in your area. The median rent at

the time was $314.

Source: © 2016 Experian

DEMOGRAPHICS

21

MARKET OVERVIEW

MEMPHISOVERVIEW

The Memphis metro covers 3,000 square miles over nine counties in

the states of Tennessee, Mississippi and Arkansas. The Tennessee

counties include Shelby, Fayette and Tipton. Crittenden County is in

Arkansas, and Tate, DeSoto, Tunica, Benton and Marshall counties are

in Mississippi. The Mississippi River runs through the metro, forming

the border between Tennessee and Arkansas. Other rivers flowing

through the region include the Loosahatchie, Coldwater, Hatchie and

Wolf, which define areas available for development. The Memphis

metro contains nearly 1.4 million residents and more than 950,000

reside in Shelby County. Memphis is the area’s most populous city

with nearly 660,000 citizens.

MARKET OVERVIEW

METRO HIGHLIGHTS

GROWING ECONOMY

A large distribution presence, favorable business

climate and diversification into other industries are

helping to grow the metro’s economy.

SKILLED WORKERS

Memphis has a large, highly skilled logistics labor

pool that helps draw companies.

AFFORDABLE COST OF LIVING

The median home price in Memphis is well below

the national median.


22

MARKET OVERVIEW

ECONOMY▪ The metro’s centralized location and favorable business climate, including a low tax structure

and right to work status, lure companies to the region. Three Fortune 500 companies are

located in Memphis: FedEx, AutoZone and International Paper.

▪ Distribution and logistics comprise a significant portion economic activity due to the metro’s

location and intermodal capabilities. The metro houses headquarters and a hub for FedEx.

UPS and USPS also have major operations here and 400 trucking firms operate locally.

▪ Other industries include manufacturing, music, film and tourism.

SHARE OF 2016 TOTAL EMPLOYMENT

MAJOR AREA EMPLOYERS

FedEx Corp.

St. Jude Children's Research Hospital

Methodist Le Bonheur Healthcare

Baptist Memorial Health Care Corp.

Wal-Mart

Harrahs Entertainment Inc.

Naval Support Activity Mid-South

First Horizon National Corp.

The Kroger Co.

International Paper* Forecast

MANUFACTURING

7%GOVERNMENT

HEALTH SERVICES

EDUCATION AND

+

OTHER SERVICES

4%

LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES

28%

AND UTILITIES

TRADE, TRANSPORTATION CONSTRUCTION

PROFESSIONAL AND

BUSINESS SERVICES

1%INFORMATION

15%

4%

13% 10% 4%

15%


23

MARKET OVERVIEW

DEMOGRAPHICS

SPORTS

EDUCATION

ARTS & ENTERTAINMENT

▪ The metro is expected to add nearly 60,000 people through 2021, resulting in the

formation of approximately 30,000 households.

▪ A median home price of $158,500 has afforded 62 percent of households to own

their home.

▪ Roughly 26 percent of people age 25 and older hold bachelor’s degrees; among

those residents, 9 percent also have earned a graduate or professional degree.

The “Blues City” region offers an attractive quality of life for residents and visitors. Parks

abound in the area. Local sports are represented by the NBA’s Memphis Grizzlies, and the

Memphis Redbirds and the Mississippi RiverKings are minor league baseball and hockey

teams. The Liberty Bowl Memorial Stadium hosts the Liberty Bowl and University of

Memphis football. Additionally, numerous casinos in Tunica County, Mississippi, offer

gaming. Music plays an important role in the history of Memphis. Today, one can relive

history by touring Graceland, the former home of Elvis Presley, or by visiting Sun Records

or the former Stax Records, which is now the Stax Museum.

35.7

2016MEDIAN AGE:

U.S. Median:

37.7

$47,100

2016 MEDIAN HOUSEHOLD INCOME:

U.S. Median:

$57,200

1.4M

2016POPULATION:

Growth2016-2021*:

4.3%

509K

2016HOUSEHOLDS:

5%

Growth2016-2021*:

QUALITY OF LIFE

2016 Population by Age

0-4 YEARS

7%5-19 YEARS

21%20-24 YEARS

7%25-44 YEARS

27%45-64 YEARS

26%65+ YEARS

12%

* Forecast

Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s

Analytics; U.S. Census Bureau


24

MARKET OVERVIEW

25

Tennessee retail markets thriving, boosting rents and tightening vacancy.

Income growth of around 4 percent in Tennessee is lifting consumer confidence and

driving retail spending. Nashville’s retail market has benefited from strong hiring that

has surpassed the national pace of growth and increasing incomes, while

employment growth in Memphis has remained steady. In Knoxville, additional retail

demand is supported by the University of Tennessee. With retail sales on the rise in

all three markets, vacancy has plummeted 70 basis points across each metro as

retailers search for quality space. The strong pace of net absorption is also fueling

rent gains across the region, with several submarkets achieving double-digit rent

growth.

Retail developers pick up pace in Nashville and Knoxville. As vacancy tightens,

builders are working to bring online additional retail space. Nashville and Knoxville

are on track to significantly increase completions from last year. Despite the influx of

new space, strong net absorption will push vacancy to cyclical lows in both markets

by year-end. On the other hand, retail construction in Memphis will moderate from

2016 but closely align with the previous five-year average as around 615,000 square

feet is completed. The slower pace of deliveries will support additional vacancy

improvement in the metro and further drive up asking rents.

Retail 2017 OutlookRobust Rent Growth in Tennessee

Whets Investors’ Appetites

Vacancy

Y-O-Y

BasisPoint

Change

MetroAsking

Rent

Y-O-Y

Change

Nashville 3.0% -30 $17.89 6.0%

Memphis 7.5% -30 $11.95 7.2%

Knoxville 3.5% -40 $13.25 4.6%

TENNESSEE METRO AREAS

* Trailing 12 months through 1Q17

Sources: CoStar Group, Inc.; Real Capital Analytics. Cap rate is weighted for $1 million-plus sales in Nashville, Memphis and Knoxville.

Investment Trends

Nashville

• Retail properties in Rutherford County and Mt. Juliet/Lebanon are popular.

Here, average first-year returns up to 50 to 100 basis points above the metro

level can be attained.

• An influx of new supply may provide investors additional opportunities at the

top end of the market.

Memphis

• Fast-food establishments and dine-in restaurants remain a popular target for

buyers. These assets change hands with average first-year yields in the mid-

6 percent span.

• While retail buildings in downtown remain popular, limited listings will push

some investors to the suburbs. Yield-seeking buyers will look to the

Northeast submarket, where returns begin in the low-7 percent band.

Knoxville

• Blount County and North/Broadway submarkets are the most active.

Properties here trade with returns in the mid-6 to low-7 percent area.

• Out-of-state and local buyers are increasingly targeting national dine-in

restaurants at cap rates in the low-6 percent band.


MARKET OVERVIEW

26

• During the year ending in March,

Memphis employers created

8,500 positions, slightly less than

the national rate of growth. In the

previous 12-month span, 15,200

employees were added to

payrolls.

• Strong growth in wholesale and

retail trade led hiring in the trade,

transportation and utilities sector,

with nearly 5,000 workers added

last year.

EMPLOYMENT

• During the last four quarters,

developers added 1 million

square feet, on par with the

previous year’s number of

completions.

• The Cordova and Northeast

submarkets combined received

more than half of all deliveries.

Cordova received 300,000

square feet of space during the

past year, including a 271,000-

square-foot Ikea.

CONSTRUCTION

• Vacancy decreased during the

year to 8.0 percent in the first

quarter as 1.5 million square feet

was absorbed.

• Strong net absorption in the

Downtown/Midtown area,

coupled with few completions,

plunged vacancy 180 basis

points during the past 12 months

to 4.2 percent.

VACANCY

• Improving vacancy and strong

demand is fueling rent growth.

The average asking rent surged

during the last four quarters to

$11.20 per square foot.

• During the year ending in March,

several locales registered

above-average rent growth. The

average asking rent in

Southaven/Horn Lake, for

example, rose 16.8 percent to

$13.24 per square foot.

RENTS

TENNESSEE METRO AREAS: MEMPHIS

increase in the

average asking rent

Y-O-Y

12.6%basis point decrease

in vacancy Y-O-Y70square feet

completed

Y-O-Y

1 millionincrease in total

employment Y-O-Y1.3%

* Forecast

1Q17 - 12-MONTH TREND


MARKET OVERVIEW

27

Demographic Highlights

2017 JOB

GROWTH

FIVE-YEAR

POPULATION

GROWTH*

38,600

FIVE-YEAR

HOUSEHOLD

GROWTH*

25,000

1Q17 MEDIAN

HOUSEHOLD

INCOME

RETAIL SALES

FORECAST*

Metro 20.4%U.S. 21.1%

$5,397 Per Household

$2,050 Per Person

1Q17 RETAIL SALES PER MONTH

Higher Yields and Strong Fundamentals Drive Interest For Retail Properties

Outlook: Strong rent growth and

tightening vacancy will create additional

investor interest in Memphis. Returns

here are above the national average.

Vacancy

Rate

Y-O-Y

BasisPoint

Change

SubmarketAsking

Rent

Y-O-Y%

Change

Southaven/Horn Lake 1.8% -50 $13.24 16.8%

Crittenden County 2.6% -70 $12.06 21.7%

Tipton County 2.9% -130 $10.07 -11.6%

Tate County 3.3% 30 $8.74 -22.2%

Fayette County 3.9% -150 $11.11 11.0%

Downtown/Midtown 4.2% -180 $10.44 2.3%

Olive Branch 4.3% -60 $16.79 0.8%

Tunica County 4.3% 240 $9.52 -4.8%

Cordova 4.5% -100 $15.45 11.2%

Northeast 5.5% -110 $13.30 21.4%

Marshall County 5.6% -250 $4.35 -7.4%

Overall Metro 8.00% -70 $11.20 12.60%

Submarket Trends

Lowest Vacancy Rates 1Q17

Sales Trends

TENNESSEE METRO AREAS: MEMPHIS

• Multi-Tenant: Transaction velocity has remained steady for Memphis’ multi-tenant

assets over the past four years. The average price has risen to around $110 per

square foot.

• Single-Tenant: Demand has risen significantly for single-tenant assets. The average

price has hovered near $310 per square foot the past two years.

** Trailing 12 months through 1Q17

Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics

*2017-2022

Metro 0.7%U.S. Average 1.4%

Metro $52,189U.S. Average $58,218

U.S. $3,785

U.S. $1,454


MARKET OVERVIEW

28

• Monetary policy in transition. The yield on the 10-year U.S. Treasury bond remained in the

low- to mid-2 percent range throughout the first quarter of 2017. Despite the Fed raising its

benchmark short-term rate twice in recent months and signaling another rise in June, long-

term rates have remained stable. The Federal Reserve wants to normalize its monetary policy

and, in addition to rate hikes, could start paring its balance sheet. While short- and long-term

rates do not always move in tandem, both actions by the Fed have the potential to lift long-

term rates.

• Sound economy a balancing act for Fed. Tight labor market conditions are finally producing

upward pressure on wages and inflation. Unemployment just hit the lowest level since 2007

and consumer confidence sits close to its all-time high. Consumers have the means and the

confidence to expand consumption and retail properties stand to gain significantly from

increased spending. The Fed must now balance growth and job creation against wage growth

and inflationary pressures. economic

• Lenders exercise disciplined approach. Overall, leverage on acquisition loans has

continued to reflect disciplined underwriting, with LTVs typically ranging from 60 percent to 70

percent for most retail properties. The combination of higher rates and conservative lender

underwriting encouraged some investor caution that slowed deal flow in late 2016, a trend that

will likely extend into 2017. A potential easing of regulations on financial institutions, though,

could liberate additional lending capacity and higher interest rates may also encourage

additional lenders to participate.

* Forecast

Sources: CoStar Group, Inc.; Real Capital Analytics

TENNESSEE METRO AREAS

Capital Markets


www.MarcusMillichap.com

Joel Dumes

Senior Vice President Investments

Senior Director - National Retail Group

Cincinnati Office

Tel: (513) 878-7720

Fax: (513) 878-7710

[email protected]

Licenses: OH SAL.2003013045, KY 63818

Stan Falk

First Vice President Investments

Senior Director - National Retail Group

Cincinnati Office

Tel: (513) 878-7721

Fax: (513) 878-7710

[email protected]

License: OH SAL.2012001364

E X C L U S I V E LY L I S T E D B Y

Broker of Record: Anne Williams

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