Another Black Eye for Commercial Real Estate

Sales down more than half since last year

Commercial real estate sales suffered yet another decline in July as the ongoing economic crisis and tightened lending landscape continued to wreak havoc on the market.

Just 45 sales were made last month in Shelby County, down 24 percent from 59 sales in July 2008 and even down 15 percent from 53 sales in June, according to the latest data from real estate information company Chandler Reports,

Sales in July averaged $546,152, a 55 percent decline from $1.2 million in July 2008 and a 43 percent decline from $961,816 in June. And the total volume of sales in terms of dollar amount last month was $24.6 million, marking a 66 percent dropoff from $72 million in July 2008 and a 52 percent dropoff from $51 million in June.

Year to date (January through July), Shelby County has notched 350 commercial sales, off 37 percent from last year’s pace of 553. Commercial deals this year have averaged $575,914, a 44 percent decrease from $1 million in 2008, and the total volume in terms of dollar amount is $201.6 million, a 64 percent decrease from $564.2 million in 2008.

And then there were three

Only three sales in July exceeded $1 million, as deals continue to shrink because of stringent equity requirements from lenders. Last month’s top sale occurred July 10 when Atlanta-based Genuine Parts Co. paid $10.2 million for the 128,481-square-foot warehouse at 7415 Stage Road.

The seller was SunTrust Equity Funding LLC (following a merger with Atlantic Equity Partners Ltd.). Genuine Parts is the operator of NAPA Auto Parts, which already occupied the building as a distribution center and store.

Built in 2001, the Class A warehouse facility sits on 15.06 acres at the southwest corner of Stage (U.S. 64) and Appling roads. The Shelby County Assessor of Property’s 2009 appraisal is $6.5 million.

The next highest sale also came on July 10 with BCH Investments LLC buying a Poplar Avenue portfolio for $1.4 million in a special warranty deed. The properties, at 4811, 4825 and 4831 Poplar Ave., are considered Lots 1, 2 and 3 of the Colonial-Poplar Commercial Subdivision.

They sit on the southeast corner of Poplar Avenue and Colonial Road, and the seller was Clifton and Whitney Co., which bought the parcels in 1978. Michael Baird is listed as chief manager of BCH Investments LLC.

Third was an entity called Newman-Tillman Properties LLC buying a pair of lots at the southeast corner of Frayser Boulevard and North Hollywood Street (alternately known as Range Line Road) in Frayser for a combined $1.7 million to build a Walgreens drugstore.

Operating in the transaction as NTP Frayser-Range Line, the company bought the 1-acre parcel at 2653 Frayser Blvd. and the 0.59-acre parcel at 3470 Range Line Road. It subsequently filed a $4.4 million construction loan through First Tennessee Bank NA to build the drug store on the adjoining parcels.

Trickling millions

Another notable sale was the Memphis Business Academy buying the 86,640-square-foot big-box retail building at 3306 Overton Crossing St. in Frayser with plans to convert it into the school’s new home.

MBA spent slightly less than $1 million for the building, most recently home to the Frayser Super Mall, and will now undertake a roughly $800,000 to $1 million renovation to be completed by January.

As for the top commercial type in July, that honor was shared by neighborhood single-tenant commercial buildings and vacant land over 1 acre with six sales apiece. Neighborhood single-tenant commercial buildings averaged $156,667 per sale and vacant land over 1 acre averaged $286,957 per sale.

The warehouse category had the highest average sales price at $3.5 million over three sales.

And the top ZIP code for number of sales was West Person/Elvis Presley Boulevard’s 38106 with six sales averaging $457,500. The Bartlett/Brunswick ZIP of 38133 led the way in average and total sales amounts with its one sale of $10.2 million thanks to the transaction involving the Stage Road warehouse.


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