Ever wonder what has been happening in the commercial real estate world around Birmingham for 2014? We took a break from our tool belts and skid steers to check on the health of our economy with our commercial real estate colleagues. As a source, Wyatt General Contractor attended the 21st annual CCIM/NAIOP Central Alabama Commercial Market Symposium held in downtown Birmingham on November 14, 2014. Interestingly enough, the conference was held in the dark for the first two hours due to a blackout in Midtown. Even in the dark, attendees were still ‘enlightened’ by the information offered sans technology and microphones.
Below is a synopsis of each presenter from the major market sectors:
Office Market – Presented by Dean Nix – Harbert Realty
Dean mentioned several notable projects over 2014 which involved new and existing tenants.
Class A Office in Metro area under 10% vacancy.
CBD – 8%
Midtown – 6.2%
South Side – 4%
Overall Birmingham – 9%
Multifamily – Presented by Bill Dobbins
Mr. Dobbins had a lot to say because of frequency of sales and construction of apartments. Needless to say, this is a hot market.
1130 units added in Birmingham.
943 under construction in the Metro area.
2289 units planned/announced.
Rent rates are increasing- Up 13.2% in Mountain Brook, Up 9.4% in Homewood
Mountain Brook now has highest rents in Alabama.
Typical rent for 3 bedroom in Birmingham is $2,450/month.
Biggest sale this year were the apartments at the Summit for $64 million
Biggest year on record for multifamily sales at $684 million.
Sale prices were $160/door at Summit, $180/door at Hallman Hill, expects $220/door at Mtn Brook
Cap Rates currently – Urban Infill 5.4%, Suburban 6.4%
Industrial – Presented by Deborah McGill Smith – Cushman Wakefield/EGS
Ms. McGill-Smith has seen 448,000 square feet of direct net absorption in 2014. Two new build to suit projects were noted for 2014. (Hibbet’s Sports in Shelby County and SKF in St. Clair County)
Ms. McGill Smith forecasts that large, sophisticated distribution warehouses will be on the rise in larger metro areas. These type facilities will service companies like Amazon and online retailers.
On the development of new space, Ms. McGill Smith sees no new speculative development occurring in the next year. Build-to-Suit projects will be more appealing and active as users look for new space.
Stutts Everette – Retail – Southpace Properties
Mr. Everette mentioned landlord’s pushing lesser quality tenants out for better tenants as the market improves.
Walmart centers and Power centers need tenants the most.
Projected $15 million in sales at new downtown Publix in first year.
Jeffery Bayer/David Sher – Increasing Regionalism effectiveness
Jeffery Bayer laid out the statistics of Alabama’s job growth as compared to the rest of the nation. Additionally, Mr. Bayer offered insights to increasing economic development by building and upgrading infrastructure.
David Sher then talked about the need for a consolidated government for Jefferson County. In the 1960’s we had a chance but did not act. Many examples of growing cities have consolidated governments such as Nashville, Charlotte, Pittsburg, Denver. (See David’s active blog about Birmingham here: www.thecomebacktown.com.
Mr. Sher and Mr. Bayer have charged the young generation to push towards setting the goal of consolidated government. This is the BHAG (Big Hairy Audacious Goal) of Birmingham.
Greg Canfield – Alabama Secretary of Commerce
Mr. Canfield offered thoughts on the strategy and vision of economic development in Alabama.
As a way to illustrate how the industry has changed over the last decade, Mr. Canfield provided the main industries of yester-year and today for Alabama.
1900’s – steel, cotton, textile, forestry
2000’s – aerospace, chemical, automotive, life sciences, steel/composites, IT
Negative part of Alabama job market was explained. The loss of 154,800 jobs in the recession occurred over the state. In our industry, 22,000 construction jobs were lost. Also, our government and services of Alabama lost 8,100 jobs. The recovery has added 98,000 jobs back to the economy. 31,600 added in September. All to say, we are growing back to where we were, but we still have work to do.
Economic Alliance of Alabama has a 3-4 year plan (1st time in the State of AL) Comprised of commerce, economic developers, community colleges, AU/UA, Superintendent of Alabama Public Schools. Alabama is focusing on education along with economic development.
Accelerate Alabama is a new program pushing 11 industry sectors, 6 of 11 are manufacturing. 5 other industries include research/development, life sciences, IT, Distribution, Corporate Operations. Mr. Canfield welcomed Evonik to Alabama as a success in partnership.
Lastly, Mr. Canfield directed everyone’s attention to a website promoting Alabama, www.madeinalabama.com.