Southern states see growth in non-residential market despite economic stalls and overbuilding by ProQuest

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Overbuilding and a general economic slowdown are affecting residential property development in five contiguous states: Alabama, Arkansas, Kentucky, Mississippi and Alabama. Fewer new properties are being constructed and those already online are taking longer to lease. Despite generous inventory with low absorption, there are still positives within certain sectors of the five-state area. Several IREM Members provide their take on how to work through these challenging economic times. The majority of bright spots are in non-residential markets in all five states. Richard Wright, CPM, director of property management at HG Hill Realty Co, sees opportunities in developing high-end infill malls. The office market elsewhere also shows gains. The Huntsville Market Survey 2007, produced by Graham & Company in Birmingham, AL, reports a tightening office market in Huntsville with vacancies running below 7%. Keeping their eyes open for new opportunities helps real estate managers in all five states.

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									                                       regionaloutlook
                                       Southern states see growth in non-residential market
                                       despite economic stalls and overbuilding
                                       by Janice Rosenberg


                                       O
                                            verbuilding and a general eco-             year-round residents and the annual         der. Local developers and builders are
                                            nomic slowdown are affecting               fall influx of University of Alabama        taking a very defensive posture and
                                       residential property development                students. Then university President         have slowed down, waiting for excess
                                       in five contiguous states: Alabama,             Robert E. Witt, declared that the           inventory to be absorbed.
                                       Arkansas, Kentucky, Mississippi and             student population would grow                  Until recently the downtown mar-
                                       Alabama. Fewer new properties are               from 19,000 to 28,000 by 2013,              ket in Memphis, Tenn., had been very
                                       being constructed and those already             drawing attention from out-of-              successful, spurred by second-home
                                       online are taking longer to lease.              state condominium developers, said          buyers, Collins said. Now sales of the
                                           “According to a local economist,            Warner Johnson, CPM, director of            mid-rise condos his company man-
                                       it will take about nine years for what          property management at Duckworth-           ages, which originally sold “like gang-
                                       was built in our housing market to              Morris Real Estate in Tuscaloosa.           busters,” have slowed to a snail’s pace.
                                       be absorbed,” said Beverly Roachell,                Overbuilding resulted, and last fall       “Construction permits are off.
                                       CPM®, president, RPM Management                 Tuscaloosa saw vacancy rates reach as       Listings are up and closings are down,
                                       Co. Inc., AMO®, in Little Rock, Ark.            high as 10 to 15 percent, the highest       which shows the market is suffering,”
                                       “So there’s not much new develop-               rates in 15 years. In Fayetteville, Ark.,   he said.
                                       ment here. The cranes have stopped.”            home of the University of Arkansas,            As a result, Collins’ new business
                                           Despite generous inventory with             property managers have seen occu-           growth rate has slowed dramatically
                                       low absorption, there are still positives       pancy rates drop from 98 percent in         this year, in contrast with the compa-
                                       within certain sectors of the five-state        2007 to just 85 percent this year, also     ny’s first seven years when its inventory
                                       area. Several IREM Members provide              due to overbuilding, Roachell said.         grew from 1,800 units to 14,000 units
                                       their take on how to work through                   In Mississippi, residential markets     in 120 condominium associations in
                                       these challenging economic times.               are down due to excess inventory,           Tennessee and Mississippi.
                                                                                       the inability of people to sell exist-
                                       EXCESS INVENTORY                                ing homes and tightening cre
								
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