Louisville, Kentucky

By: Marty Finley

A Florida real estate investment firm has one of Louisville’s largest downtown office towers under contract and should close on the acquisition later this month. Kirk Cypel, CEO of Lake Worth, Fla.based In-Rel Properties, said his firm plans to close on the purchase of the 26-story Meidinger Tower on South Fourth Street by late April. The current owner is New York-based DOF IV Meidinger Tower LLC, which purchased the tower in 2013 for $16.6 million in a foreclosure sale. Cypel declined to disclose the negotiated purchase price. The building ranked sixth on Louisville Business First’s largest office buildings list for 2016 based on leasable square footage, with roughly 331,000 square feet.

The building has a mix of professional firms and technologically inclined companies, including Computershare Inc., Mountjoy Chilton Medley LLP, River Road Asset Management LLC, Northwestern Mutual and Seiller Waterman LLC. Louisville Business First also is a tenant. The tower is managed by Louisville-based NAI Fortis Group, which will be retained by In-Rel Properties as property manager if the deal goes through, Cypel said. “They’ve done a good job with the building,” he said. Jon Seiz, president of NAI Fortis Group, said the building is 96.7 percent leased. This will be In-Rel’s first Louisville acquisition, but second in Kentucky. The firm owns the 238,000-square-foot Chase Tower in downtown Lexington.

Cypel said his firm feels strongly about the Louisville market as it has watched it evolve over the past several years. He said the city is moving in an interesting direction with the completed construction of the Ohio River Bridges Project, the renovation and expansion of the Kentucky International Convention Center downtown and new hotel and residential developments in the works.

Meidinger Tower’s position next to the Fourth Street Live entertainment complex also is a plus, with Cypel noting that real estate is all about location. “It’s just an exciting place to be. I just think it’s only going to get stronger,” Cypel said of Louisville. “I wish there was more of a residential component downtown, but I think it’s coming.” Cypel also pointed to Louisville’s historic architecture and a push by developers to creatively reuse several downtown buildings for office, retail and other uses as a draw to the market. Furthermore, he praised the strong tenant mix inside Meidinger Tower, calling it a stabilized tower with no need for major renovations. “The bones of the building are very good,” he said. Because the building has received a refresh in recent years, he said his firm’s goal is to maintain the quality of the tower and assess it each year for possible tweaks.

In-Rel has more than 3 million square feet of commercial space in its portfolio, which ranges from stabilized properties in the vein of Meidinger Tower to older properties that require renovations. The company operates in Alabama, Georgia, Florida, Kentucky, Oklahoma and Tennessee. Cypel said In-Rel owns office, retail and some residential properties in cities such as Memphis, Tenn.; Birmingham, Ala.; Oklahoma City; Tampa, Fla.; and Fort Lauderdale, Fla., and is opportunistic about expansion into new cities if the deal makes sense. He said the company evaluates each deal by the quality of the real estate, not what sector it fits into. “You don’t grow for the sake of growth,” he said. “You grow when you find great opportunities.” The company stays away from what Cypel called “gateway cities,” such as New York, Chicago and Washington, D.C. In those cities, he said, the institutional players are deeply entrenched and are throwing “silly money” around on real estate. Louisville, in comparison, is a less-volatile market that doesn’t see the dramatic ups and downs of a giant city. “You can make a living (here) and don’t have to compete with the world,” he said.

Tampa, Florida – April 14, 2017

In-Rel Properties is pleased to announce that Ollie’s Bargain Outlet, Inc. (NASDAQ:OLLI) has signed a 43,000 square foot lease at the Town N Country Promenade located at 7095 West Waters Avenue in Tampa. Construction has commenced and the store is scheduled to open in the 4th Quarter of 2017. Founded in 1982, Ollie’s Bargain Outlet currently operates 238 stores in 20 states, making the chain one of America’s largest retailers of closeouts and salvage merchandise. Famous for its signature catch-phrase “Good Stuff Cheap,” Ollie’s has a huge variety of famous brand-name merchandise in every department – food, books, housewares, toys, electronics, domestics, clothing, furniture, health and beauty, flooring, seasonal items and so much more – at up to 70 percent off typical retail prices. Ollie’s will join Walmart, Bealls Outlet, Dollar Tree, Rainbow, GNC, Cato and Sally Beauty Supply at this active location. Town N Country is located at the intersection of West Waters and Hanley Road with more than 60,000 cars passing each day. Debra Lawson, Senior Property Manager at In-Rel Properties said, “It’s exciting to have Ollie’s join us at Town N Country. Their presence will add an even greater vibrance to an already dynamic shopping center.”

St. Petersburg, Florida – April 12, 2017

Old Time Pottery has signed a 55,163 square foot lease to open its first store in the St. Petersburg area at the Plaza 66 Shopping Center located at the corner of 66th Street N and 46th Ave N. Founded in 1986, Old Time Pottery offers a huge and ever-changing selection of unique items for the home at deep discounts. The company operates 38 stores in 11 states and is based in Murfreesboro, TN. Alex Boettcher, an associate at In-Rel Properties, said, “We’re excited to have Old Time Pottery join us. It’s a great amenity for the community and we are attracting other quality retailers, services and restaurants to this center.” A RaceTrac convenience store and gas station opened at this location in February. Old Time Pottery is expected to open in May 2017 and construction is underway currently. The shopping center’s other established tenants include Family Dollar, Cici’s Pizza, Rent-a-Center and Fantastic Sam’s.

By:  Ron Riley, Senior Vice President, Colliers International

Memphis may be known for its industrial market, but there are several interesting stories unfolding in the Memphis office market as well. Investors, both local and national, have found opportunities in an office market that can relate to the phrase, “slow and steady wins the race.”

The Memphis office market con­sists of just over 52 million square feet, with nearly 60 percent of that in the Downtown, East and 385­ Corridor submarkets and more than 85 percent of the Class A space located in those same submarkets. The Memphis metro ended 2016 with overall vacancy rates of 10.5 percent. Those rates have remained in the 10.5 to 10.9 percent range for the last two years.

Class A vacancy has been on a slow and steady decline, falling from 10.2 percent at the end of 2014 to 7.9 percent at the end of 2016, its lowest level in more than a decade. This has prompted Class B owners to make investments in their properties, like the $7 million capital investment by Clark Tower, located in the East Memphis submarket, to upgrade mechanical systems and common areas.

Rates, too, have been relatively steady for the last decade. At $17.07 per square foot as of the end of 2016, they are nearly the same as they were at the end of 2007. With the exception of 2012, rates haven’t dipped below $16 per square foot for the last 10 years.
This stability can be largely attributed to very measured development. Even for several years prior to the recession, significantly all office development was for pre-leased buildings, with less than a million square feet delivered since 2010. So it is striking that nearly 1.4 million square feet is currently under construction and investors from outside the market are suddenly taking notice of the Memphis metro area.

The most unique and significant office development in Memphis is actually a redevelopment in the Mid­town submarket. Crosstown Con­course will completely transform the Sears, Roebuck & Co. distribution center and retail store originally constructed in 1927 in Crosstown, just two miles from downtown Memphis. Between 1927 and 1965, the building expanded to a total of 1.5 million square feet, but by 1993, both the retail store and the distribution center were closed. The building remained vacant until construction began on this massive project nearly two years ago.

The redevelopment project was bandied about for many years and ultimately garnered the support it needed to get off the ground when eight founding tenants, including St. Jude Children’s Research Hospital, Methodist HealthCare and Crosstown Arts, committed to leasing 600,000 square feet of the space. When completed this spring, the 10-story building will be home to a variety of office, residential, retail, healthcare, education and arts organizations. The Crosstown Concourse website sums it up nicely as a million square feet of opportunity, built on history and powered by renewal.

Adaptive reuse of existing space isn’t limited to the Crosstown project. Peabody Place, a 360,000-square-­ foot downtown mall that cl0sed in 2012, is being renovated by its owner, Belz Enterprises, and will be home to a new headquarters building for ServiceMaster. The majority of the building will house 1,200 of the company’s 2,200 Memphis employees, while 20,000 square feet is being set aside for retail and/or res­taurants.

In keeping with the measured approach to development and redevelopment, more than 87 percent of the nearly 1.4 million square feet under development is pre-leased. Unlike some major markets that may have overbuilt and are now seeing a softening in leasing and a corresponding slowdown in rent growth, Memphis has become more attractive to investors that are looking for stable fundamentals that result in higher yields.

Real Capital Solutions, an investment manager for high net worth individuals, recently purchased over 500,000 square feet m Cordova, in­cluding multiple buildings at Ger­mantown Court, and the Horizon Business Center, for a total of over $47 million.
Priam Capital, based in Nashville, is a sponsor of boutique private equi­ty real estate funds focused on stabi­lized assets. Priam recently acquired Grove Park Center, a 60,300-square­foot, multi-tenant building that is 96 percent occupied, for a reported $8.6 million.

Priam Capital also purchased 5400 Poplar Avenue, a 45,000–square-foot building occupied by Paragon Bank, for $5.7 million.

According to Jimmy Beard, an as­sociate with Priam Capital, “We see Memphis, and in particular East Memphis, as an extremely stable market that will provide our inves­tors with long-term cash preserva­tion and appreciation. A number of institutional buyers have entered the market, including Angelo, Gordon & Co.’s and Olymbec, in addition to long-time Memphis investor High­woods. This shows confidence from across the country that Memphis is trending in the right direction. We recently had our first capital closing on our Fund III vehicle and Mem­phis remains a target market for us.”

MEMPHIS, TENN. — In-Rel Properties, a commercial real estate investment firm based in Lake Worth, Fla., is overseeing the $7 million renovation of Clark Tower in Memphis. Located at 5100 Poplar Ave., the 32-story, 668,009-square-foot office tower is the second-tallest building in Memphis. The renovation was designed by the Crump Firm and includes a new entry, updates to the lobbies, bathrooms and common areas and new elevators and mechanical systems. Existing amenities at Clark Tower include 24-hour security, a fitness center, on-site banking, structured parking and an on-site conference center. Colliers International leases Clark Tower on behalf of In-Rel. Dan Walker Associates began construction in the third quarter of 2016 and expects to wrap up at the end of the first quarter this year.

Wunderman Memphis, a full-service digital affiliate of multinational advertising and public relations company WPP PLC (NASDAQ: WPPGY), renewed its lease and is taking more space in Clark Tower.

Local architects The Crump Firm and Clark Tower LLC filed July 29 a $63,640 building permit for new tenant space renovations as part of Wunderman Memphis’ expansion.

Howard Graham, senior vice president of Wunderman’s Digital Performance Media group, said the Memphis office is taking an approximately 6,000-square-foot space on the 32nd floor of the 34-story Clark Tower as part of a renewed lease agreement.

“We initially chose this space three years ago because we love the views,” Graham said.

Wunderman previously occupied space on both the 31st and 32nd floors but is combining those two offices together on the 32nd.

The lease agreement gives Wunderman the option to expand by another 3,000 square feet. Clark Tower is owned by In-Rel Properties.

The renovation will create a stand-up conference room that gives employees the ability to write on the walls and utilize a flat-screen TV for video conferencing with clients across North America and globally, Graham said.

Wunderman is also taking the opportunity to test new team collaboration office concepts.

Wunderman affiliate Young & Rubicam Inc. recently made a major move to Memphis, but Graham said Wunderman’s growth is not directly tied to the $457 million contract with the U.S. Navy.

Wunderman Memphis leads a segment called Performance Media, focused on supporting clients across the country with digital media, site content and digital optimization.

With a nationwide client pool, Wunderman came to Memphis because of its large population of digital media and creative professionals, Graham said.

The Memphis office currently has a team of 40 employees and is preparing for growth.

“This is a testament to how great we feel the Memphis talent pool is and intend to hire,” Graham said. “I wouldn’t be surprised if we grew to 100 in the next three to four years.”

Phil Dagastino Jr., a senior vice president at Cushman & Wakefield/CommercialAdvisors, represented Clark Tower in the lease agreement, and tenant advisor Kelly Truitt, senior vice president of CBRE Group Inc.’s Memphis office, represented Wunderman Memphis.

TIFTON – Tifton Mall, also known as Tifton Plaza, located at 458 Virginia Avenue North, has been sold for $11.3 million.

Florida-based In-Rel Properties purchased the property from RCG Venture-s based out of Atlanta. The buyer, Tifton Plaza Owner LLC, an affiliate of In-Rel Properties, represented themselves and the seller was represented by Jones Lang LaSalle’s Atlanta office.

The 220,165 square foot retail center is almost 95 percent occupied with an established tenant base including major retailers such as TJ Maxx, Belk, JC Penney, Beall’s and Jo Ann Fabric, and features a Carmike Cinema.

Jim Hurlock, In-Rel’s vice president of Operations noted, “We are pleased to complete this acquisition and look forward to serving the needs of this fine community. This property compliments our holdings in nearby Bainbridge and strengthens our management presence in South Georgia.”

Tifton Mall is an important area mall that serves Tifton and many surrounding communities including Ty Ty, Omega, Brookfield, Sumner, Ocilla, Phillipsburg and Sycamore. The property is adjacent to, and visible from, Interstate 75.

In-Rel Properties is a privately held, vertically integrated real estate investment and management firm – the name stands for “Intelligent Real Estate.” The company focuses on acquiring properties opportunistically and adding value through upgrades, repositioning, rehabilitation, re-tenanting and solid management. Through its affiliates the company controls a diverse portfolio including properties in Fort Lauderdale, West Palm Beach, Birmingham, Lexington and Oklahoma City. For more information, visit the company’s website at www.in-rel.com.

The vast parking lots between and around the neighboring Clark and iBank towers catered a bit more to walkers on Wednesday, thanks to MEMfix East.

Numerous signs posted on lightposts told pedestrians how many minutes it would take to walk to nearby restaurants and other destinations.

“It’s a 3 minute walk to Whole Foods & Houston’s,” states one sign that also pointed the way. “It’s a 1 minute walk to Casablanca, Bosses Wings and Lisa’s Lunchbox,” states another.

And a few crosswalks across the interior drives were freshly repainted in bright Christmas colors, red and green.

Such MEMfix events are designed to demonstrate how changes to neighborhood infrastructure can promote walking and cycling while calming traffic.

The first phase of this MEMfix occurred 11 a.m. to 2 p.m. Wednesday, complete with Livable Memphis’s Mobile Porch where passersby could offer their ideas on how to improve the business district. The second phase, weather permitting, was to occur 5 to 7 p.m. Wednesday along the neighboring Brookhaven Circle West.

MEMfix East was the seventh MEMfix, but the first that sought to improve a district built after World War II and almost exclusively for the car-centric lifestyle of the suburbs.

Clark Tower, 34 stories, and the 22-floor iBank Tower (formerly White Station Tower) were built in the early 1970s and 1960s, respectively.

“I’d say a successful outcome would be that regardless of whether they were going to Brookhaven Circle (the commercial street on the east side of Clark Tower) or walking over to shop down on Poplar or even going to Whole Foods maybe to get some groceries, that they’d be able to walk out of here and have a legible network of pedestrian pathways, way-finding signage, things like that,” said John Paul Shaffer, program director for Livable Memphis. It’s the nonprofit organization that takes the lead on MEMfix events.

“… Longterm, maybe it’s a business association, (or) a business improvement district comes together and looks at some of the parking lots and says, ‘We can make better use of some of this space. Do we do liner buildings on parking lots?… Do we look at doing some (parking) decks for shared benefit and take some of the cars off of the surface and get them into (parking) decks? Or do we look at tying into the bus rapid transit options that might be coming down the pike?”

A master plan prepared by the landscape architecture firm Blair Parker Design shows a network of six types of pedestrians paths that could be established in and around the towers.

A key participant in carrying out such a plan would be In-Rel Properties, which now owns both office towers. The Florida-based In-Rel has started making $6 million worth of improvements inside and outside the buildings, and has said it plans to create an 18-acre office campus around the towers.

“I’m not only the owner,” In-Rel president Dennis Udwin said Wednesday, “I’m an architect by profession. I’m very interested in MEMfix.”