If there were ever a time for a business migration to downtown Jackson, it might be now.
At least that’s the opinion of some experts, who say that office space in suburban buildings is hitting a wall. The last building constructed specifically for non-medical office space was constructed nearly four years ago in Ridgeland. This means that if businesses need significant high-end space, they will need to head to Jackson.
That would be a change from recent years, when businesses have fled downtown Jackson for other locations. Much of the problem is the perception of downtown with crime, water problems and other issues that have emerged over the past 10 years.
Sam Cox of Pinpoint Reality, who represents the Regions Building downtown, says much of that has been resolved recently, particularly due to the presence of Capitol Police.
Regions Plaza, the tallest building between Shreveport and Birmingham along the I-20 corridor, is experiencing something of an upswing and owners are optimistic about the building’s future.
“Water and crime have been addressed downtown,” Cox said. “Maybe it’s time for the state Legislature to find incentives to attract people downtown.”
That said, it all comes back to the occupancy level in the suburbs, which is at an all-time high, according to Cox.
“There’s just no space and developers would like to build new buildings,” Cox said. “Money is not enough to justify new construction. So the question arises whether it makes sense to move downtown. Are people willing to pay double to live in the suburbs rather than coming in downtown Jackson we’re about to find out.”
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That theory could be put to the test with businesses moving out of Ridgeland’s 14-acre Paragon Center.
BankPlus acquired the building earlier this year to house banking and mortgage operations as well as other support areas and will provide growth space that is expected to support the bank’s strategic expansion initiatives.
As current companies’ leases in the 150,000 square foot facility expire, there will be a need for space.
“So the bulk of the vacancies throughout the region are downtown,” Cox said. “Will people like to move downtown? It’s a great place. It’s centrally located and affordable. Downtown is really the most sensible way to move money-wise.”
The national trend
Getting back downtown isn’t just a Jackson problem.
Real estate developers across the country, particularly in the northeastern United States, are choosing not to build suburbs because of skyrocketing construction costs. This leaves room for businesses to return to city centers, where 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 who build are those who build for a purpose, like a bank or something. If you have tens or hundreds of millions of dollars in cash, you don’t sink it into an office building. It’s not just Jackson. It’s 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 returned to banks because developers don’t. have not repaid their loans.
Managers of the Pinnacle Building announced a month ago that the 16-year-old structure was only 30% occupied as it attempts to rebound after the departure of a multitude of law firms to the suburbs .
“But there is still a demand for office space,” she said. “The same general principle of the 1980s, after the savings and loan crisis, is happening today. Gradually, new demand will take over the office market. For Jackson, honestly, the situation is better than that of many other American city centers.”
However, she admitted that there was work to be done.
“It’s real. Jackson is the most distressed submarket in the Jackson metro area,” Hadden said. “But I can look at the numbers and tell you the vacancy rate in suburban Jackson is about 4%. That means downtown Jackson is the place to be from a rental standpoint. space as well as from 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 must do its part.
“Yes, it’s City 101. You have to master the basics,” she said. “You have to deal with trash, crime, water. If you get the basics right, Downtown Jackson actually has some unique competitive advantages that position it well relative to other submarkets.”
Jackson is in the center of the region. It is well accessible and has a multitude of quality spaces compared to the rest of the area.
A liveable city
With the possibility of as many as 800 people living in downtown Jackson by the end of summer, the downtown Jackson apartment scene could actually spur the movement, according to Hadden.
“The fundamental value proposition of cities is housing near jobs. It’s not just about jobs. It’s not just about housing,” she said. “The purpose of cities is to have housing near jobs. That’s literally why we have cities. So, yes. Adding housing near jobs builds demand.”
In downtown Jackson, many people who live there have ties to education, whether it’s Mississippi College Law School, the University of Mississippi School of Medicine, or Mississippi State University School of Architecture.
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For Jassen Callender, director of the MSU architecture program in downtown Jackson, he believes the more he can get his students to live downtown, the better the neighborhood will be and the better his program will be.
The program serves up to 60 students per year who work downtown and need housing after spending their first four years on the main campus in Starkville.
“The idea from the beginning was that students should learn about the city,” Callender said. “In many cases, a lease will be passed from one student to the next each year. However, randomly, people stay everywhere. What we find, however, is that those who choose to live in Jackson and downtown in particular will ultimately have a better perception of Jackson as a city when they leave.”
He said these students typically immerse themselves in the day-to-day aspects of what’s going on.
“We want to do our part to help downtown,” Callender said. “As a school of architecture, we want to find projects that can help the region, and when students live here, it gives them more incentive to be able to do that and better understand what’s needed.”
Callender said he thinks downtown Jackson may be close to a resurgence.
“You see it, you feel it. Sometimes it teases you,” he said. “I see there is an influx of young people and professionals who could completely change everything. It seems close, but I just don’t know. I know there is a lot to offer in downtown Jackson. Yes, we’ve all heard the stories, but we also know that we can make it better just by being here.
Ross Reily can be reached by email at rreily@gannett.com or 601-573-2952. You can follow him on Twitter @GreenOkra1.
This article was originally published on Mississippi Clarion Ledger: Jackson MS: Can downtown bounce back?
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