Commercial development is picking up all over the country.
The hottest sector within that market is warehouse sites. Developers nationwide have spent over $1.5 billion on property that has been proposed for warehouse, industrial park usage and light industrial projects, according to a recent article at Realtor.com.
The demand for warehouse and industrial space in Birmingham is not quite as sizzling as other markets, but Graham & Co.’s senior vice president Ogden Deaton said Birmingham is on track for recovery in the industrial sector.
“I think we’re probably a little behind the rest of the country in recovery, but it is happening now,” Deaton said.
Deaton said one sign of recovery is the stabilization of rates and even some rate increases throughout the market.
Vacancy rates are also going down. Deaton said the tipping point for occupancy will be around 95 percent.
When the market reaches that point “there potentially will be some building,” he said.
Deaton said new product could be hindered by the costs associated with construction.
“There needs to be some pretty strong demand for that to happen,” Deaton said.
Deaton hopes the market will continue to stabilize and be as healthy as it’s been since the end of the recession.
Birmingham’s two largest deals in the last year were Pradco’s 263,000-square-foot lease at Shelby Commerce Park and Plantation Patterns’ 247,000-square-foot lease in the same park.
Deaton said those deals and some expansions have tightened the warehouse market in Birmingham.
“We’ve come a long way,” Deaton said, referring to the time since the recession years.