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