Memphis Retail Market Report

Memphis’ impressive pandemic rebound hits a roadblock. Following a two-year span in which net absorption eclipsed new supply by more than 1 million square feet, the metro entered 2023 as one of just 14 major U.S. markets with a sub-4 percent vacancy rate. The rapid depletion of available stock allowed Memphis’ average asking rent to rise at a pace that ranked among the top 10 fastest nationally in 2022. However, the tides are shifting. Economic headwinds coincide with a delivery slate that is the largest since 2016. Inventory is projected to expand by the most rapid clip of any major metro not located in Florida or Texas in 2023. Larger-scale projects opening this year include The Cascades, a 200,000-square-foot mixed-use development in Olive Branch, with a significant portion of the retail component unaccounted for as of late 2022. The other 100,000-square-foot-plus property set for 2023 completion is a fully-leased Kroger Marketplace in Arlington, which should have less of an impact on local fundamentals. Memphis, as a whole, will tie for the largest vacancy rise of any major U.S. market this year, however, as retailers curb expansion plans, due to weaker economic conditions in the market. Still, the metro will retain a vacancy rate below the national average and its own respective 2019 measure.