2012 Global Market report - NAI Global

Birmingham, Alabama
Huntsville/Decatur County, Alabama
Contact
NAI Chase Commercial
Realty
+1 888 539 1686
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
Total Population
Median Age
1,135,203
1,163,620
565,361
$68,238
$50,071
36
The Alabama economy is slowly rebounding with economic
development prospects picking up and a few projects that were
set in motion before the recession, beginning to come online.
Unemployment remains a large factor in the recovery process.
While the unemployment rate has improved in recent months,
it is still hovering around 9.3% in Birmingham. Any increase in
commercial leasing will depend on job growth. Until there is a
significant increase in employment, the recovery process will
remain relatively slow.
Q2 2011 ended with positive absorption across the office
market. Absorption was 149,938 SF, an increase from negative
349,445 SF in Q1 when Regions Plaza, a vacant 211,000 SF
building, was purchased by an out of state investor and
put back on the market as a multi-tenant space for lease. The
positive absorption in Q2 is largely due to a 100,000 SF lease
with FEMA located in the CBD. Occupancy for Q2 was 88.6%,
an increase from 87.9% at the end of Q1. Rents held steady
in most submarkets with an average weighted rental rate of
$19.38 SF for the Birmingham market and $21.33 SF for
Class A product.
The Birmingham industrial market experience 230,622 SF of
positive direct absorption in Q2 2011, a continued increase
from 60,518 SF of positive absorption in Q1. The direct
occupancy rate for the market was 81.0%, an increase from
79.3% at the end Q1. The amount of sublease space available
in the market continues to decrease with 275,174 SF available
in Q2. The overall occupancy rate for Birmingham’s industrial
market is 79.0%, an increase from 77.4% in Q1.
Birmingham's retail market experienced negative absorption
of 138,079 SF in Q2 2011, a decrease from positive 35,620
SF at year-end 2010. Occupancy dropped slightly to 87.0%
in Q2, down slightly to 87.6%. The average weighted rental
rate has also declined from $15.77 SF in 2010 to $15.37 SF
at mid-year 2011.
Contact
NAI Chase Commercial
RE Services
+1 888 539 1686
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
Total Population
Median Age
586,806
648,240
294,040
$65,238
$49,530
37
Huntsville, Alabama continues to remain one of the southeast’s
top metropolitan area areas for 2011. Huntsville ranks
as the nation’s third largest aerospace and defense
manufacturing hub. Huntsville was named one of the Top 5
Small Cities of the Future in North America. Strong growth
has propelled Huntsville to Alabama’s second largest
metropolitan area as referenced by the US Census. Again,
Madison County was one of the state's leaders in jobs for
new and expanding employers.
The Huntsville/Madison County real estate market has
remained stable throughout most of 2011 even though the
local economy continues to remain in recession along with
the rest of the country. Defense related jobs continue
to trickle in as a result from BRAC consolidation of 2005.
However recent cutbacks related to NASA and the potential
for cutback in defense has created an environment of
uncertainty as it relates to near term expansion for many
tenants and users. As a result, absorption has slowed. The
primary driver for growth continues to be the Base Realignment
and Closure process.
The Huntsville/Madison County community continues to lead
Alabama again in both population growth and new jobs. All
market segments have seen some growth but absorption
continues to remain sluggish. Commercial sales remain
negligible on large projects as a result of tight credit; some
smaller projects are moving to closing with less constraint.
New construction in office, industrial and retail continues to
be stagnant due to credit markets. We anticipate modest
growth for 2012.
The office sector received the biggest news with approval
of a new 140,000 SF office building, the first of several to
be included in the mixed use park being developed by
Corporate Office Properties Trust. Redstone Gateway will
create an additional 4.6 million SF of commercial space over
a 10 year period.
Retail remains slow, however several projects are under
construction for Kroger and Target in Madison and small
shop space in Jones Valley. Manufacturing Companies
remain in a hiring freeze. Some new build to suit developments
are being planned for Research Park and vacancy rates
remaining relatively low when compared to comparable
cities.
Birmingham At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
$
N/A
16.50
13.50
21.50
18.00
13.00
N/A
$ 26.00
$ 19.50
$ 32.00
$ 26.00
$ 16.50
N/A
$ 21.10
$ 16.65
$ 26.00
$ 22.50
$ 17.80
N/A
7.30%
26.00%
N/A
11.60%
16.60%
Bulk Warehouse
Manufacturing
$
$
3.00
3.00
$
$
4.00
6.50
$
$
3.50
4.50
9.00%
13.00%
High Tech/R&D
retaIl
$ 9.00 $ 12.50 $ 10.20 8.00%
Downtown
$ 12.30 $ 25.00 $ 14.50 11.00%
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
6.50
8.50
18.00
$ 17.35
$ 19.00
$ 40.00
$ 12.80
$ 17.00
$ 29.00
13.50%
10.00%
13.00%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
$
$
$
305,000.00
195,000.00
50,000.00
40,000.00
320,000.00
N/A
$
$
$
$
$
850,000.00
310,000.00
125,000.00
240,000.00
850,000.00
N/A
Huntsville/Decatur County At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
$
N/A
17.50
14.00
19.00
16.00
13.00
N/A
$ 25.00
$ 17.00
$ 25.00
$ 21.00
$ 15.75
N/A
$ 19.00
$ 15.00
$ 21.00
$ 18.00
$ 15.00
N/A
9.00%
20.00%
15.00%
6.00%
12.00%
Bulk Warehouse
Manufacturing
$
$
2.00
3.00
$
$
3.50
4.50
$
$
3.00
3.75
10.00%
15.00%
High Tech/R&D
retaIl
$ 8.25 $ 10.25 $ 9.25 12.00%
Downtown
Neighborhood Service Centers
$
$
10.00
8.00
$ 15.00
$ 18.00
$ 13.00
$ 15.00
10.00%
7.00%
Community Power Center
$ 8.00 $ 10.00 $ 7.00 5.00%
Regional Malls
$ 20.00 $ 65.00 $ 30.00 9.00%
deVeloPment land Low High
Office in CBD (per buildable SF)
Land in Office Parks (per acre)
Land in Industrial Parks (per acre)
Office/Industrial Land - Non-park (per acre)
Retail/Commercial Land (per acre)
Residential (per acre)
$ 400,000.00 $ 600,000.00
$ 50,000.00 $ 120,000.00
$ 25,000.00 $ 50,000.00
$ 50,000.00 $ 150,000.00
$ 225,000.00 $ 750,000.00
$ 15,000.00 $ 125,000.00
2012 Global Market Report n www.naiglobal.com 80