birmingham AL

We’re back! That is back to positive absorption and sales volumes for industrial buildings which are at a pre-recession pace. The submarkets were varied with Oxmoor and South accounting for most of the positive news for 2013. Pent up demand has broken the malaise of the past few years. New development projects are still scarce, and new construction is being seen in the form of build-to-suits.

Rents have finally increased over the preceding year and our agents report that recently negotiated leases include annual increases as a matter of course. Inflation rates and interest rates remain low. Changes at the Fed appear to be nominal for now.

Occupancy levels in the mid 80% continue to be the norm, with slight increases over 2012. There were no new projects in the bulk warehouse area for 2013. Demand has increased and now a tenant seeking a 100,000 sf space has very limited options. A carry over from 2013 is a sizeable supply of sublease space, particularly in the South market.

Sales of freestanding industrial buildings were the shining star for 2013 with absorption of over 2.0 million sf, more than doubling the pace of 2012.

Our sense is that the pace will continue into 2014 and increased activity will drive the market but not to the point where speculative development will occur. New deals will look like the build-to-suit project for SKF, featured on the cover. We concluded last year’s introduction letter with a note of cautious optimism. We were right and the optimism continues based on a strong performance from industrial sectors. Automotive and steel continue to undergird the Birmingham industrial sectors. We sincerely express our thanks to our colleagues for assistance in bringing you the 2014 Graham Report.

Yours Truly,
Steve Graham, MAI, CRE
Mike Graham, CPM, SIOR

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BHM Graham Report Industrial 2012

BHM Graham Report Office 2014