If there were ever a time for there to be a migration of business back into the Downtown Jackson area, it may be now.
At least that is the opinion of some experts, who say that office space in buildings in the suburbs has hit a brick wall. The last area building built specifically for non-medical office space was built nearly four years ago in Ridgeland. That means if there are businesses needing significant high-end space, they will need to head into Jackson.
That would be a departure from recent years where businesses have fled Downtown Jackson for other places. Much of the problem has been the perception of Downtown with crime, water issues and other problems that have cropped up in the last 10 years.
Sam Cox with Pinpoint Reality, which represents the Regions building in downtown, says much of that has been taken care of recently, specifically because of the presence of Capitol Police.
Regions Plaza, the tallest building between Shreveport and Birmingham along the I-20 corridor, is experiencing a surge of sorts, and ownership is bullish on the future of the building.
“Water and crime have been addressed in downtown,” Cox said. “Maybe, it’s time for the state legislature to find some incentives to lure folks back downtown.”
Having said that, it all comes back to the occupancy level in the suburbs, which are at an all-time high, according to Cox.
“There is just no space, and developers would like to build new buildings,” Cox said. “The money doesn’t work to justify new construction. So, the question becomes, does it make sense to move downtown. Are folks willing to pay double to be in the suburbs as opposed to coming to downtown Jackson. We are about to find out.”
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A test of that theory might come with businesses that will be leaving the 14-acre Paragon Centre in Ridgeland.
BankPlus acquired the building earlier this year to house bank and mortgage operations along with other support areas and will provide room for growth that is expected to support the bank’s strategic expansion initiatives.
As leases with current businesses in the 150,000 square foot facility expire, there will be a need for space.
“So, the bulk of the vacancy in the entire area is downtown,” Cox said. “Will folks like this move downtown? It’s a great place. Its centrally located, it’s affordable. Downtown really is the smart money move.”
The national trend
Making the move back to downtown is not just a Jackson issue.
Developers across the country, particularly in the Northeast U.S., are choosing not to build the suburbs because of skyrocketing construction costs. That leaves businesses the option of going back into downtown areas where the costs are more affordable.
“Look, no one is going to build new office buildings. It’s just not going to happen,” said Tracy Hadden of the Brookings Institute. “The only people building are people who are building for a specific purpose, like a bank or something else. If you have tens of millions or hundreds of millions of dollars in cash, you aren’t sinking it into an office building. That’s not just Jackson. That is everywhere.”
She said Jackson is a perfect example in that banks aren’t going to help finance new construction when there are virtually new Class-A buildings like The Pinnacle that are being handed back to the banks because developers have defaulted on loans.
The managers of the Pinnacle Building announced a month ago that the 16-year-old structure was only 30% occupied as it tries to bounce back from a host of law firms leaving for the suburbs.
“But there is still demand for offices out there,” she said. “The same general principle from the 80s after the Savings and Loan crisis is happening now. Gradually, new demand is going to take up the slack in the office market. For Jackson, honestly, the situation is better than many other U.S. downtowns.”
She admitted, however, that there is work to do.
“It is real. Jackson is the most distressed submarket in the Jackson Metro area,” Hadden said. “But I can look at the numbers and tell you that vacancy in the Jackson suburbs is about 4%. That means that Downtown Jackson is the place to go from a space standpoint as well as a good business decision standpoint. Why spend more in the suburbs when you can get nicer office space for less in Downtown Jackson?”
Hadden also stressed that the City of Jackson has to do its part.
“Yes, that’s City 101. You have to get the basics right,” she said. “You have to take care of the trash, the crime, the water. If you get the basics right, Downtown Jackson actually has unique, competitive advantages that position it well, compared to other submarkets.”
Jackson is in the center of the region. It good accessibility, and it has a multitude of quality space, relative to the rest of the area.
A livable city
With the possibility of as many as 800 people living in Downtown Jackson by the end of the summer, Downtown Jackson, the apartment scene could actually spur movement, according to Hadden.
“The basic value proposition of cities is housing near jobs. It’s not just jobs. It’s not just housing,” she said. “The point of cities is to have housing near jobs. It’s literally the reason we have cities. So, yes. adding housing near the jobs strengthens demand.”
In Downtown Jackson, many of the people living there have ties to education, whether that be the Mississippi College Law School, University of Mississippi Medical School or the Mississippi State University School of Architecture.
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For Jassen Callender, the director of the MSU architecture program in Downtown Jackson, he believes the more of his students he can get to live in the Downtown area, the better the area will be and the better his program will be.
The program has as many as 60 students per year working in the downtown setting and needing a place to live after having spent their first four years at the main campus in Starkville.
“The idea from the very beginning is that the students would have to get to know the city,” Callender said. “In many cases, a lease will get passed from one student to the next student every year. Randomly, people stay everywhere, though. What we do find, though, is that those who choose to live in Jackson and downtown specifically ultimately have a better perception of Jackson as a city when they leave.”
He said those students generally immerse themselves in the everyday aspects of what is going on.
“We want to be a part of helping downtown,” Callender said. “We as an architecture school want to find projects that can help the area, and when the students are living here, that gives them more incentive to be able to do that an more of an insight of what is needed.”
Callender said he believes Downtown Jackson could be close to a resurgence.
“You see it, you feel it. Sometimes, it teases you,” he said. “I can see there being an influx of young people and professionals that could completely turn everything around. It feels close, but I just don’t know. I do know there is a lot that Downtown Jackson offers. Yes, we have all heard the stories, but we also know we can make it better just by being here. That’s what this program is all about.”
Ross Reily can be reached by email at [email protected] or 601-573-2952. You can follow him on Twitter @GreenOkra1.
This article originally appeared on Mississippi Clarion Ledger: Jackson MS: Can downtown bounce back?
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