This article examines the January 2021 prices of the major categories of commercial property in the Hattiesburg MSA, including industrial warehouses, office space and retail stores.
The total Hattiesburg market is 1.44 million square feet of space, with 764,374 square feet for lease (up 19% from one year ago) and 676,836 square feet for sale (up 13% from one year ago).
How Does Additional Space On The Market Affect Prices?
Economics 101 states that since more space has come on the market in 2021 compared to one year ago, that prices should fall. That is only true if demand stays constant. What we have experienced with Covid-19 is not only is demand different for each of the major categories of commercial real estate, but demand is different for sale properties and also properties for lease. Let’s drill down into the trends and drivers of both sale and lease prices for various sectors.
Industrial Space For Sale
In the industrial category, prices increased temporarily a few months ago due to a large industrial property coming on the market that accounted for 80 percent of the square footage and priced above market at $60 per square foot. This skewed the average sale price from $28 to $45 per square foot. As of January 2021, the property is no longer on the market which allowed average sale prices to gravitate back to $28 per square foot. Currently, there are only 17 industrial properties for sale or lease, totaling 153,000 square feet.
Office Space For Sale
In the office sector, there are 72 office spaces for sale or lease, totaling 378,405 square feet, comprised of 56 spaces for lease totaling 194,717 square feet and 16 spaces for sale totaling 161,615 square feet. Lease square footage increased 13,000 square feet over the last 12 months while sale square footage decreased 55,000 square feet (20%), causing office sale prices to increase 10 percent to $84 per square foot. Office lease rates currently are asking $14.15 per square foot but over the last month no spaces were leased and only one office space was sold. The average office space is on the market 624 days.
Retail Space For Sale
There are 68 retail properties on the market totaling 597,000 square feet, with 39 for lease averaging $8.89 per square foot and 29 for sale averaging $76 per square foot. In the last 30 days, one retail space was leased at $4.67 per square foot, discounted by half since it was on the market 995 days. One space was sold at $143 per square foot, almost twice the market average since it was premium retail space.
Hattiesburg MSA Lease Market Overview
Lease prices for the Hattiesburg MSA market increased in all sectors except office space over the last 12 months. Industrial prices increased to $3.58 per square foot (3 percent) and are expected to increase more since there is not much space available and future demand will grow due to the e-commerce need for fast delivery driving local storage.
Office lease rates have declined 6 percent due to a slight increase in supply, but the medical sector has stabilized at $18 to $25 per square foot due to industry economics.
Retail lease prices are some of the lowest in the region and have increased 15 percent the last 12 months despite the move to online shopping. The retail space driver has been a move away from large spaces to smaller spaces, combined with growth in startup businesses.
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