A major national brand will land in the Birmingham metro area, and commercial real estate professionals think it could help the Magic City get more looks from others.
The brand, of course, is Amazon. As the Birmingham Business Journal first reported, the online giant will build a $325 million fulfillment center in Bessemer, which will create 1,500 jobs with the potential for many more. We recently reported that the site was purchased for $3.738 million, and the state of Alabama is giving the company incentives totaling approximately $48 million.
The new facility will be located near Bessemer High School off Powder Plant Road. Amazon will be a tenant on the property, while Atlanta’s Seefried Construction & Development will be the developer.
So what does the deal mean for commercial real estate in Birmingham?
Although Birmingham is one of the last major metros to get a fulfillment center, experts agree Amazon could help the metro draw the attention of other large corporations.
“Amazon ought to be here and now they are. Having companies like them invest in Greater Birmingham make it easier for others to do the same, so I am very glad to see it,” said Tripp Alexander, principal and director of industrial services at Colliers International Alabama.
CRE professionals in the office sector say they are hopeful that having Amazon could spur other companies to consider the Birmingham metro and possibly create more jobs, which could go a long way toward helping fill large chunks of office space availability that exist in downtown and suburban submarkets.
From an industrial real estate standpoint, the project itself is significant due to its size and complexity, said Sonny Culp of Graham & Co. The building will be 855,000 square feet, which is significant in an industrial real estate environment that doesn’t have a ton of sites available for new construction.
“These Amazon buildings have multiple interior levels and state-of-the-art inventory systems. The use of technology inside this building will be a first for our area. So, just the construction and fit out of this facility will have an economic impact in the next 18 months,” Culp said.
He said it’s hard to know what the impact will be once completed, but that transportation services and certain suppliers could see a positive impact.
The Amazon fulfillment center is the largest economic development win for the Birmingham metro in terms of job creation in many years.
“It does put a feather in our community cap,” Culp said.
The Amazon project is another win for western Jefferson County as well, which in the past few years has added a Dollar General facility, a Publix distribution center, and several other developments. In fact, a recent report from Graham & Co.’s industrial group showed the West submarket, defined as from Interstate 459 and Interstate 59 to Vance, was the top-performing submarket last year, with 98.3 percent occupancy.
Overall, the industrial sector of Birmingham commercial real estate in 2017 had one of its strongest years in a decade, and 2018 is shaping up for another strong year thanks to the Amazon deal and others.