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Top 5 Mississippi Commercial Real Estate Trends in 2021

The contents of this article do not constitute financial or investment advice. To find a solution tailored to your needs, reach out to our team of commercial real estate professionals.  

Mississippi is expected to be a commercial real estate investor’s best friend in 2021 because the state has managed to “buck”  the national trend and attract buyers to invest in the area’s affordable real estate, particularly in the Jackson area. This is in large part due to attractively low interest rates, which have dipped to levels rarely seen since the 2008 financial crisis. This is helping shape some very lucrative commercial real estate trends for 2021. Take a look at the top 5 investment strategies to yield an optimal ROI for the upcoming year. 

1. Warehouse Space

In a typical year, stores house a lot of inventory, yet 2020 was anything but typical. Social distancing has completely altered the market landscape, and now people are buying online in droves. In fact, e-commerce sales rose 30% during the first half of the year as compared to the same period in 2019. This shift in how consumers spend their dollars is helping drive businesses to move inventory from retail shopping complexes to warehouse storage spaces in order to quickly ship to homes and businesses without breaking health distancing guidelines. 

While we predict some decline in online sales during 2021 as social distancing restrictions begin to lift, there are still millions of people who are limiting their in-person retail shopping while COVID-19 treatments are being developed and delivered. This means that the main focus in 2021 will continue to be at-home web purchases until treatments become widely available and the growing number of cases begins to decline.

This is why warehouse space is already in such high demand across the country, especially for essential businesses such as groceries and distribution conglomerates. The Jackson, Mississippi market is an ideal locale for investors looking to take advantage of the latest commercial real estate trends because of our large commercial warehouse inventory that helps keep prices highly competitive. We also have a centralized location for optimized regional distribution that’s highly attractive to potential lessees.

2.  Manufacturing Space

Similar to the warehousing sector, commercial manufacturing space is expected to be a prime investment strategy as production needs increase due to the large volume of online purchases. People are spending much less on activities such as travel, and much more on health and wellness products, food, and home goods like furniture and kitchen appliances.  Online auto sales have also been a large contributor to the growth of e-commerce in 2020, and this is expected to continue into a new wave of growth.

In Mississippi, the greater Jackson community is home to nearly 500 manufacturers, and the city and state have set in place marketing incentives aimed at attracting additional auto, food, furniture, and other producers to the region. These incentives include wages that allow for both high profit margins and a good standard of living for employees due to the area’s competitive cost-of-living. Mississippi also offers same-day driving access to over 50% of the country and a sophisticated distribution network.

The best news? Completed industrial space is expected to increase by 29% in 2021, making it the perfect time to invest in manufacturing property in the state.  

3. Flex Space

Flex Space is perhaps the biggest of the commercial real estate trends sweeping the 2021 market. According to JLL, it could account for one third of commercial real estate portfolios by 2030.  Many businesses have transitioned their teams to at-home roles due to COVD-19 social distancing restrictions. Because of this, leaders are now beginning to understand the cost-saving benefits of moving out of traditional office leases and into shared spaces that reduce company overhead. 

With Flex Space, businesses share square footage with other companies in order to save money on the lease, as well as to reduce property tax, insurance, and repair costs for single, double, and triple net leases. The terms for this type of lease are typically shorter than traditional office agreements, and shared amenities include WiFi, meeting rooms, lounge, kitchen, and warehouse space. The spaces themselves are multi-functional, and may incorporate an office, warehouse, manufacturing space, research center, and retail store. 

Likewise, multi-functional businesses that weren’t considered essential during 2020, such as salons and personal services, are expected to make a comeback in 2021 as social distancing restrictions are lifted.  In addition, those in emerging industries such as cannabis providers often find sharing space with fellow tradespeople appealing because it allows them to pool their resources while providing a sense of community. The newly formed Mississippi Cannabis Trade Association is one such example of a group of community advocates leading the way in forming a more cooperative way of doing business that allows for higher profit margins and greater ROI for investors.

Any properties with flexible space are seen as ideal for leaders in such organizations, as they allow for a quick redesign to accommodate shifting business needs, and provide the opportunity for cooperative environments that help cut costs for those in the launch or recovery phase of production.

4. Modifiable Restaurant Space

Because full-service restaurant operators took such a hit due to the social distancing shutdowns, many restaurant spaces with kitchens, check-out counters, display cases, and full-service dining rooms are sitting empty. Entrepreneurial-minded food industry professionals are expected to make their move by re-imagining these spaces as carry-out havens, with plenty of parking spaces for the now booming curbside crowd, and drive-thrus that take advantage of the double-digit increase in these types of visits, even as dining rooms began to reopen.

The added benefit of modifiable space is that, once restrictions lift, restaurant managers can again provide customers with a full-service dining experience. Jackson is already known as a culinary mecca,  with a well-deserved reputation for sumptuous Southern fare that will continue to attract visitors and locals alike to its charming restaurant scene in 2021. This will help make the area’s restaurant space one of the most exciting commercial real estate trends of 2021 for investors willing to include modification clauses in their leases.

Your best bet for success? Offer flexible percentage leases that allow restaurateurs to pay you a percentage of their sales each month as the economy recovers.

5. Small Office Space

Different from Flex Space, small office space allows one company or group a high degree of privacy and quiet, while still providing a professional environment for conducting business. Many professionals who have been juggling multiple responsibilities at home, including home-schooling, additional cooking due to restaurant shutdowns, and transitioning to a home office, are eager to move back into a dedicated space of their own that allows them to put maximum focus on their clients and workload.  

Combine this with the fact that employers are now more willing to allow staff members to work from anywhere in the country, and you’ve got a recipe for investing success when it comes to small office space. Many of these business leaders are seeking a centralized place for regional staff members to work in order to increase productivity and create the kind of face-to-face collaborations that breed innovation.

Three regions in Mississippi are considered especially attractive to new residents, including Jackson, Memphis, and the Gulf Coast. Each had sizable population increases due to the advantageous cost of living in these regions. Focusing on properties in these parts of the state is a great strategy for discerning investors looking to take advantage of commercial real estate trends. 

Top 3 Tips to Take Advantage of 2021’s Top Commercial Real Estate Trends

1. Offer short-term leases. Many people are still recovering from the economic downturn, and short term leases allow for re-entry into the market while also protecting everyone’s bottom line. In other words, it lowers your risk for long-term losses. Because it’s also an attractive option for the thousands of business owners who are in economic recovery, you shouldn’t have any issues extending the lease once it expires, or finding another short-term lessee for your property if the original lessee’s financial situation changes.

2. Allow for subleases. This helps ensure that you’ll continue to collect funds outlined in your agreement, even if the initial lessee can no longer pay the whole amount themselves. More importantly, if your lessee finds they need a larger space to expand, they’ll be more likely to look to you for a better option if they know that you’ve included a sublease clause that ensures they won’t be financially tied to two spaces.

3. Be sure to find a reputable real estate agent. Having a savvy marketing plan in place that takes into account local industry trends in order to attract just the right clients to your space is vital. An established agent will also provide you with a well-organized portfolio of up-to-date repairs, service contracts, and warranties for any building or space you invest in. This allows you to provide lessees with attractive options such as a triple net contract to help save them money on monthly rent costs, while also mitigating their risk of costly repairs to the property. 

Speed has over 17 years of experience serving commercial real estate investors in the Jackson area and beyond. Contact us today for assistance in securing, developing, marketing, and managing the best properties to optimize your profits.

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Suite 190
Ridgeland, MS 39157