Urban Land Institute trend-watcher Chuck DiRocco says everything comes down to real estate.
"If an adjustable-rate mortgage resets from $600 a month to $900 a month, that's $300 in disposable income that people are not spending elsewhere," DiRocco said. "It's going to affect commercial real estate down the line."
As one of the authors of the land institute's Emerging Trends in Real Estate, DiRocco was in Memphis last week to present the study's findings and to discuss which markets are the "ones to watch."
And, frankly, Memphis wasn't one of them.
In terms of commercial and multi-family development potential, the study ranked Memphis 38th out of 45 metropolitan areas. Topping the list were Seattle, New York, Washington, D.C., Los Angeles, San Francisco, and Boston.
"The top markets to watch fall on the coast," DiRocco said. "It all comes down to global pathways."
That and what the study calls "24-hour cities."
"For years, Emerging Trends has extolled the handful of America's 24-hour cities — multifaceted markets with desirable, walkable residential neighborhoods near commercial cores: New York [City], Washington, D.C., San Francisco, Boston, and Chicago. These markets — along with Southern California's suburban agglomeration and more recently Seattle — have gained further status as the preeminent U.S. global gateways," read the report.
With the economy on a downswing, investors want to be safe, not sorry. But DiRocco noted that logistics experts are beginning to look inland for global gateways. And that is where local panelists think Memphis could succeed.
"Though we're not a port city," said local panelist Jim Mercer of CB Richard Ellis, "I think we're probably the next best thing."
With FedEx's hub and the busiest cargo airport in the nation, Memphis is uniquely situated to become what experts call an "aerotropolis," a city built around a bustling airport and aviation-intensive businesses.
But, as DiRocco says, everything depends on real estate.
Which might explain why, later that same day at a public hearing, representatives from airport area businesses and the Memphis medical community spoke against the city's proposed sexually oriented business ordinance.
The area around the airport includes an unlikely combination of Smith & Nephew, Medtronic, Elvis Presley Enterprises, FedEx, and various adult businesses.
If enacted, the city ordinance would replace a new county ordinance that outlaws topless dancing and prohibits alcohol in the clubs. The city ordinance would allow beer sales and topless dancing.
If the City Council decides to do nothing, the county ordinance will go into effect countywide January 1st.
"We would prefer to adopt stricter guidelines," said Bill Griffin, a senior vice president with Smith & Nephew. "We want to make the area around the airport a nice place to do business."
John Lawrence, head of the Airport Area Development Corporation, said member businesses were concerned about the secondary effects of sexually oriented businesses, such as crime and falling property values.
"Today, it's an area where industry is bringing in prospect after prospect. They're bringing in doctors, researchers. Do we value these businesses?" Lawrence asked.
It seems strippers are standing (or dancing) in the way of Memphis' potential in the global economy. But that's not quite fair. As a representative for the sexually oriented businesses, attorney Edward Bearman pointed out that nothing in the new ordinance makes sexually oriented businesses safer or reduces crime.
"The reason the clubs are located near the airport is because that's where the zoning will allow them," he said. "They have money invested in this town, just the same as other businesses."
I'm not going to get into whether clubs should close at 3 a.m. or midnight or whether they should allow beer sales or brown-bagging, nude dancing or semi-nude dancing.
But if the city's goal is to encourage global pathways through Memphis, then the airport area is a precious commodity. Elvis Presley Enterprises, for instance, has a $250 million plan to transform the area around Graceland much like Disney did in Anaheim, California.
If the city doesn't enact an ordinance, the county ordinance might regulate the strip clubs right out of business. I'm not sure that's right, but lap dances and back rooms don't seem to fit with a global commercial hub and an international tourist destination.
Adult businesses may offer something to see, but they won't make Memphis a market to watch.