2016 proved to be a productive year in Birmingham’s industrial real estate market. For multi-tenant buildings, occupancy rates eclipsed 90% for the first time since 2005, with the market absorbing over 400,000 sf.
There is now only 1.5 million sf of space remaining. Asking rental rates have moderately increased for both bulk distribution and office/warehouses. The South submarket experienced the most positive absorption in 2016 and is now 95% occupied. Single-tenant industrial buildings posted over 2 million sf of positive absorption for the year. Overall occupancy increased by 2% and is now at approximately 95%. The market has also seen an uptick in development over past years; however, we have yet to see any speculative industrial properties built.
Birmingham’s economy experienced steady growth in 2016. Unemployment levels were at an eight year low and several major projects were completed over the course of the year including the Oxford Pharmaceuticals development and KAMTEK expansion. Interest rates remained relatively flat during 2016, and did not increase until a 0.25% bump in December. Continued rate increases are expected in 2017; however, this will all depend on how the Trump presidency affects inflation and unemployment rates. Like the rest of the nation, we are eager to see how the new administration will impact the economy in 2017.
As always, our successes correlate to the confidence from our relationships with our clients, vendors, investors, and colleagues. Thanks for a good 2016 and we wish continued success for all in 2017.
Steve Graham, MAI, CRE
Mike Graham, CPM, SIOR