A Conversation With ... Lee McLean III

Tell me your property mix right now and what’s coming online.
I’ve got lots listed in the west part of town where we’re seeing a lot of growth because of the Republic area, some lots at West Sunshine and James River Freeway where the new Kum & Go was built. With the growth of Republic as well as the new Target coming, we think that area is likely going to see quite a bit of growth in the near future, as well as the West Chestnut [Expressway] and I-44 corridor that has also seen benefit from the new soccer complex. Some lots that we don’t yet have listed but will soon be bringing to market, lots around the Springfield Underground. There’s always is interest for new development land on the east side of town, and they’ve been working on some platting and infrastructure to be able to make some of the lots around the Underground available for development, both potentially for sale as well as land lease or built to suit.

Is that related to the LeCompte Road widening?
That’s a big part of it.

What types of properties are folks most interested in right now?
The industrial market has been strong for several years, but we’re not seeing a lot of activity due to lack of inventory. We have very, very low vacancy in industrial property, so there’s just not a lot available for potential tenants or buyers. Where I’m actually seeing the most activity is in the office market; although nationally vacancy rates for office are in the mid-teens, here in our market, it’s closer to 5%, and we’re still seeing a lot of activity there because business remains strong and there is still turnover, which leads to new leases. The majority is the Class A and B product. While remote work has not been a real strong player in our market, it has given office users more flexibility; therefore, they still have to like where they go to work.

What impact do you think the city of Springfield’s efforts on cleaning up key corridors might have on redevelopment opportunities?
It certainly helps and is welcomed by those that own property there, but it’s somewhat tempered by lack of traffic drivers in those areas. It will help multifamily developers decide to go into those areas, which can add rooftops and can add traffic to those areas and then have an additional effect on commercial development.

Is the rate cut from the Federal Reserve this month, and plans for more rate cuts, making people more interested in property or able to take out more debt for investments?
It will help, and it will especially help those who maybe got an initial development based on a very low rate and might be coming up for a rate renewal soon. It will have the largest impact on the multifamily and traditional investment properties. It will still have some impact on owner-operator and spec development, but demand for those is still somewhat limited by construction costs as well.

Are construction costs still impacting speculative builds?
We still aren’t seeing very much commercial spec development, mostly due to those elevated construction costs because it’s difficult to push rents as high in our market as we need to justify those new construction costs, but we are beginning to see some increased rents to help justify that demand. We’re seeing it across all property types – retail, industrial and office – most significantly in industrial.

You mentioned multifamily growth. Do you think the Grant Avenue Parkway will be a growing opportunity for that type of development?
Yes, we are seeing some new multifamily planned in that Grant Avenue Corridor, and do think that the cleanup efforts by the city there will help spur some of that development.

As part of the Forward SGF comprehensive plan, the city is talking about a code overhaul, beautification efforts and making zoning less restrictive and lean more toward multiuse. Will those efforts help your industry?
Anything that the city can do to make Springfield more developer friendly will have a positive effect on the city long term. I know there are efforts in place, and I certainly hope they’re able to bring those to fruition. Some of the surrounding communities certainly have a perception of being more developer friendly, and I think Springfield is trying to change that.

Why did you want to get into this line of work, and what was your father’s role in that?
My father [Lee McLean Jr.] was a longtime developer in the Springfield area, and I probably would not have gotten into real estate if not for his encouragement. So having him as a teacher and mentor has had a huge impact on my career. He’s 100 years old, and he asks me every single day if I sold anything or made any deals today.