Memphis-based Education Realty Trust Inc. is expanding its national headquarters with a long-term lease covering 27,000 square feet in one of the newest office properties in East Memphis.
Boyle Investment Co. also has signed NewSouth Capital Management Inc., which is relocating from 1100 Ridgeway Loop to occupy 9,000 square feet at Boyle’s office property at 999 Shady Grove.
The two new leases bring the Class A building’s occupancy rate up to 95 percent. Also, this leasing activity puts a new office building in East Memphis closer to reality.
Education Realty Trust, a self-administered, self-advised real estate investment trust that focuses on university housing, will move in by first quarter 2012. NewSouth Capital Management will take occupancy by the end of this year.
Education Realty Trust’s move will accommodate the company’s recent growth, according to Randy Brown, chief financial officer and executive vice president.
“It presents the opportunity to improve the operational efficiency of each department’s work area and allows for expansion in the future,” he says.
Boyle’s in-house architect, John Vergos, designed both spaces. For Education Realty Trust, that meant a new layout compared to its current offices.
“We wanted our national headquarters to better reflect our status and to be more accommodating to the many visitors we host here in Memphis,” Brown says.
The most immediate and significant impact will be to bring all of the company’s Memphis operations together. Currently, its employees are located on two separate floors in the Oak Court Building.
“The new offices and improved layout will allow us to bring everyone together on one floor and create an even better synergy between departments,” Brown says.
“We’ve had long-standing business and personal relationships with a number of their executives over the past several years,” Halperin says.
Similarly, Boyle has been acquainted with NewSouth Capital and its co-founders, Trow Gillespie and Steve Morrow, since the early 1970s. The investment advisory firm is moving from 1100 Ridgeway Loop to about the same space in a new layout at 999 Shady Grove. By relocating, NewSouth Capital’s former space gives Sedgwick CMS the chance to expand its headquarters in 1100 Ridgeway Loop from 70,000 square feet to almost 80,000 square feet.
“We have had a terrific relationship with Boyle for many years and are excited about our move to the new space,” Gillespie says.
999 Shady Grove is a 155,000-square-foot building in the 204-acre, mixed-use Ridgeway Center development at Poplar Avenue and I-240.
Built in 2008, the building counts SunTrust Bank, Dixon Hughes PLLC and Farris Bobango Branan as existing tenants.
Boyle has a site immediately north of 999 Shady Grove to build an identical building.
“We’ve had some discussions with a couple of prospects which could kick that building off,” Halperin says.
It would require from one-third to one-half of the building to be pre-leased before any construction would start.
Overall, office leasing activity in Shelby County has been slow, but it’s tied to the macro economic outlook of the U.S.
“I think people are, in many respects, in a holding pattern,” Halperin says. “They’re waiting to see what’s going to happen. But we’re still doing deals.”
Class A office properties in East Memphis, which consists of 13 buildings and 1.9 million square feet, have a 13.1 percent vacancy rate, according to Xceligent Inc.’s mid-year report. These properties experienced 71,299 square feet of year-to-date net absorption at mid-year.
This compares to a 20.1 percent vacancy rate for the entire Memphis office market, which consists of 257 properties and 19.6 million square feet, according to the report. At mid-year, the entire Memphis market had gained 178,322 square feet of net absorption.