When Memphis needs new office absorption, it apparently can absolutely, positively count on FedEx Corp.
The Memphis-based company has signed a 25,000-square-foot lease at Boyle Investment Co.’s Marsh Center to bring a work group closer to its East Memphis corporate headquarters.
Much of the recent office leasing activity in Memphis has been renewals, expansions or companies moving within the market, so this kind of net gain tightens up the market.
The group, called Customer and Business Transactions, currently operates mainly at FedEx World Headquarters. The nine-building complex at Hacks Cross Road in Southeast Memphis predominantly houses employees of FedEx Express, a subsidiary of FedEx Corp.
The main executives of FedEx Corp., a holding company, have offices on Shady Grove Road.
“The move from our corporate headquarters in Hacks Cross to the Marsh Center will consolidate and bring closer a group that reports to the FedEx Corp. management,” Sally Davenport, spokesperson with FedEx, says. “It will eliminate a lot of the travel time in terms of meetings in particular. They’ll have to walk across the street as opposed to getting in a car and driving 15 to 20 minutes for meetings. It just improves the accessibility of the group with their immediate management.”
The legal group works on customer agreements, internal review of communication materials and general business transactions for FedEx. Some of those employees will be staying at FedEx World Headquarters.
“We still have some remaining legal people who are not moving because they report up through FedEx Express, so I don’t know if the use of that space has yet been determined,” Davenport says.
Boyle developed, owns and manages the six-story, 155,000-square-foot building at 1000 Ridgeway Loop.
Built in 1995, the property counts Marsh USA Inc., Evans Petree PC and Landmark Community Bank as tenants. The lease brings the building to almost full occupancy.
Traditional Construction Co. Inc. is building out the office space.
Darrell Cobbins, president of Universal Commercial Real Estate LLC, helped broker the lease.
Mark Halperin, executive vice president with Boyle, handles leasing at the property.
“We’re extremely excited to be continuing our relationship with FedEx,” he says. “We also think it’s very positive for the marketplace as it’s a net gain for the market.”
The overall Memphis market registered 69,178 square feet of net absorption in 2010, according to Xceligent Inc.’s fourth quarter report.
The market, which has 257 office properties with 19.5 million square feet, ended the year with a 19.5 percent vacancy rate. There are 37 Class A properties with 5.2 million square feet, according to this report.
These types of properties, which include the Marsh Center, lost 95,761 square feet of absorption through full-year 2010. This could be due in part to Highwoods Properties Inc. delivering the 148,000-square-foot Triad Centre III in early 2010.
Much of the recent office leasing activity has been companies moving around the city.
“There has been a lot of musical chairs, but we have seen growth,” Halperin says. “We’re seeing some new deals right now which would be net gain for the overall market. We’ve got more prospects right now than we have had in quite a while. We’re pretty optimistic.”