Memphis seems to have missed out on the southeastern growth spurt. While sights in the downtown area, such as Beale Street, attract 4 million visitors a year, retailers have been slow to enter the market. And the greater Memphis area is expected to plod along at a modest 5 percent for four years. Still, there are signs of a burgeoning retail boom in some of the faster-growing 'burbs.

“Most of the retail growth is east and south of the city,” in suburbs like Collierville and Southaven, Miss., says Jeff Wallace, a senior research associate at Sparks BBER, a consultant group associated with the University of Memphis. “It's following population and money.” Currently, vacancy rates in the affluent eastern submarket of Collierville are at 7.4 percent, below the area average of 10.1 percent.

Target, Kohl's and Walgreen's have all built stores there in recent months. The newest arrival is the open-air Avenue at Carriage Crossing, an 810,000-square-foot center to be built by Cousins Properties Inc. and Jim Wilson & Associates. Scheduled to open in late 2005, it will house such high-end retailers as Dillard's, Banana Republic, Victoria's Secret and Parisian's. It seems residents here can afford the price of such upscale shopping. The median income in the Collierville submarket was $93,000 in 2003 — compared with $30,557 for the overall greater Memphis area, which is slightly below the national average.

Even in less wealthy suburbs, open-air centers seem to be the nouvelle vague in retail. There are currently two planned for Southaven, in DeSoto County. One, DeSoto Pointe, which is being built by local developers Utley Properties and Trezevant Realty Corp., will house a 120,000-square-foot McRae's, which is slated to open in the spring of 2006.

The other, Southaven Towne Center, which is being developed by CBL & Associates, is a 480,000-square-foot open-air project scheduled to open in late 2005. The center was already 70 percent leased when the project was announced in May.

The average household income in Southaven is only about half of that in affluent eastern suburbs such as Collierville and Germantown. However, what DeSoto County lacks in wealth, it makes up for in population as the fastest-growing section of the greater Memphis area. In fact, it's the 39th fastest-growing county in the country, according to a Census Bureau report released in May. While the entire Memphis area grew only 16 percent from 1990 to 2003, DeSoto County's population skyrocketed 82 percent to 123,500. It also has the lowest vacancy rate in the Memphis area, at 6.2 percent. “It's a growing market and it has been underserved, from a traditional retail perspective,” says Michael Lebovitz, a senior vice president at CBL.

Some, however, doubt whether the greater Memphis area is ready for an open-air center, let alone three. “I don't know how Memphis is going to react,” says Patrick Jacobs, vice president and general manager of Hickory Ridge Mall in Memphis proper. Lebovitz says his center's broad base of stores will appeal to a range of local shoppers. Con-firmed tenants include JCPenney, Pier 1 Imports, Linens 'n Things and Circuit City.

Certainly, Memphis itself has had its problems attracting and keeping retailers, although Jacobs, whose Hickory Ridge mall is located in the southeast corner of the city, says new retailers shouldn't write off the city center. “There are opportunities to be had in the undeserved areas,” he says. Hickory Ridge is an example of how to cope with changing demographics. The 850,000-square-foot mall was built in 1981. Five years ago, the city annexed a large tract of land, which included Hickory Ridge. In the process, the population changed from white to black.

“When your customer changes, you change or die,” says Jacobs. Some mall anchors, such as Goldsmith's-Macy's, have successfully adapted. The anchor changed its color palette and made minor changes in product offering, such as providing more upscale shoes. Hickory Ridge also brought in Ashley Stewart and Lane Bryant. An upcoming addition will be Chicago-based sportswear merchant Lark. “In this market, we are holding our own and stabilizing our occupancy,” Jacobs says, claiming occupancy of just above 80 percent.

Two other malls have not fared as well. One large shopping center, the Mall of Memphis, closed in December 2003. And Raleigh Springs has lost three of its four anchors; JCPenney remains its lone holdout.

That could change. Especially along Poplar Avenue, in the city's midtown, urban pioneers are moving back into the city and buying old fixer-upper homes, says Jacobs. That has provided opportunity for some retailers, such as Home Depot, which recently acquired an abandoned grocery center there.

There is a great interior market along Poplar Avenue, which runs from the Mississippi River through the city and out to the eastern suburbs, says Danny Buring, a managing partner for the Memphis firm, the Shopping Center Group. That is, if you can find a location. “Everybody would like to be there, but real estate is hard to find, and you're going to pay a premium,” he says.

Downtown Memphis has seen some growth. Developers hope to capitalize on the popularity of Beale Street with the addition of a $250 million stadium nearby. The FedEx Forum will open this month to house the city's new basketball team, the Grizzlies, which was originally based in Vancouver. The verdict is still out on whether the new arena will attract retailers. For now, downtown residents still have to drive elsewhere for a grocery store and to West Memphis, Ark., for the nearest Wal-Mart. Downtown still remains largely entertainment-oriented.

Memphis-based Belz Enterprises discovered that fact when it tried to build Peabody Place, a 300,000-square-foot shopping plaza in the downtown area. “I think they had a vision of it being more retail-oriented, but the market said it needed to be more shopertainment,” says Buring. Currently, Peabody Place includes a 22-screen theater, the largest in Memphis, and Isaac Hayes, a restaurant and nightclub with a 475-seat theater owned by the Shaft composer.

Slow-growing Memphis does offer retailers stability, says Buring. “It's very diverse. If you have a glitch in one sector of the economy, it doesn't affect the whole economy.” Of course, during boom times, the greater Memphis area underperforms the rest of the country in economic growth. But during the inevitable declines, it doesn't crash and burn.

“During downtimes,” says Wallace, “retailers are not going to lose much, if anything at all.”

DEMOGRAPHIC OVERVIEW

Population: 1.24 million (July 2003)

Per Capita Income: $30,557

Median household income: $40,035

Unemployment rate: Shelby County had 5.9% unemployment in June 2004

Occupancy: 89.9% in second quarter of 2004

Rental Rate: $12.90 per square foot in the second quarter of 2004

Sources: Various

REGIONAL GROWTH

Average Population Growth: DeSoto County is the 39th fastest-growing county in the U.S. It grew 82% from 1990 to 2003, while the entire Memphis area grew only 16%.

Vacancy Rates: 6.2% in DeSoto County; 7.4% in Colliersville; 10.1% in the greater Memphis area.

Three existing Memphis-area malls have suffered. Hickory Ridge had to adapt to a dramatic population shift, Raleigh Springs lost three of its four anchors and the Mall of Memphis closed last December.