2019 Graham Industrial Market Survey
After a banner year in 2017, the momentum of the Birmingham metro’s industrial real estate market experienced a slight slowdown in 2018. multitenant occupancy dipped by less than 1% and was 93.2% across all submarkets at year-end 2018. Despite the multi-tenant setback, single-tenant industrial building occupancy continued to tighten for the third consecutive year, with nearly 800,000 sf of positive absorption. The Central submarket was the market leader in 2018, netting 114,000 sf of positive absorption. As anticipated, average rents continued their upward push, especially for office warehouse space, which grew by more than $0.50/sf. A number of new developments were announced including a flagship data center on the 27-acre former Trinity Steel site, major expansions totaling 4.1 million sf by Mercedes-Benz in Bibb County, and Amazon’s first foray into the metro with an 855,000 sf fulfillment center in Bessemer.
The US economy is in uncharted territory as we approach the 10-year anniversary of the post Great Recession economic expansion in July 2019, on
course to set the record for the longest expansion the country has seen since the government started keeping records in the mid-1800’s. The national unemployment rate remained below 4% through 2nd, 3rd, and 4th Quarters of 2018. Inflation, which typically rises with a tightening labor market, has remained steady around 2%, causing uncertainty about future interest rate hikes amongst the Federal Reserve and investors alike. Stock market volatility, weakening bonds, and strong valuations with solid underlying property fundamentals are keeping commercial real estate an attractive investment alternative. As always, our successes correlate to the confidence from our relationships with our clients, vendors, investors, and colleagues. Thanks for a good 2018 and we wish continued success for all in 2019.
Steve and Mike Graham
Graham & Company, LLC