Birmingham’s office market is holding its own with overall market occupancy at 82.6 percent as of fourth-quarter 2024. We saw a slower second half of the year, but that is to be expected during a presidential election year when companies often hit pause on significant real estate decisions.
During the fourth quarter, Birmingham’s multi-tenant office market recorded negative absorption of 67,739 square feet, but that was a notable improvement from the negative 268,061 square feet recorded the previous quarter.
Leasing activity for the quarter came in at 180,849 square feet, bringing the year-to-date total to just over 562,000 square feet — about 22 percent below the previous year’s pace. While definitely a slowdown, this performance is nothing out of step with the broader national trends.
Signs of positive momentum
The good news? Since the start of 2025, activity has picked up across the board. Tenants are back in the market touring space and rethinking their long-term office needs. Some are expanding, some are rightsizing to space that better fits how they work today and others are updating their office protocols to bring employees back in more regularly — all of which is driving movement in the market.
In addition, several major employers are making long-term commitments to Birmingham with significant new investments, including the University of Alabama at Birmingham (UAB), Coca-Cola Bottling Company United, Brasfield & Gorrie, Medical Properties Trust, Southern Research and Vulcan Materials, to name a few. These projects show that major players see the Birmingham region as a long-term home, and that’s a strong vote of confidence in our market.
Future projects to watch
Beyond what’s already underway, several high-profile redevelopment opportunities throughout the Birmingham region could serve as catalysts for growth and help stabilize existing assets in the office market.
One to watch is Alabama Power’s former Steam Plant, an 87,000-square-foot “brick and beam” structure that sits on two city blocks in the Central Business District (CBD). This opportunity has caught the attention of developers and users alike and could become a transformative project and catalyst for downtown Birmingham. Another notable property is a five-parcel site totaling 1.9 acres on 4th Avenue South that recently sold and is expected to be redeveloped into a productive asset that will add significant value to the surrounding Lakeview and Southside neighborhoods.
In the suburbs, Brookwood Mall, now vacant and sitting in the heart of Birmingham’s highly sought-after Midtown submarket, is slated for redevelopment. Riverwalk Village, a massive 90-acre mixed-use community in the Hoover/Riverchase submarket, will bring together residential, medical, retail, hotel and recreational uses as a true live-work-play destination.
Together, these projects have the potential to create overall momentum for Birmingham’s office market and strengthen the city’s position as a dynamic place to do business.
Factors in leasing decisions
Of course, Birmingham isn’t immune to national headwinds. Construction pricing and interest rates continue to challenge both landlords and tenants. Higher capital costs are pushing rental rates higher, and with the additional cost of modifying existing spaces, we’re seeing longer lease terms and rising rental rates, which, in turn, adds value to stabilized office buildings.
Talent in demand
Looking beyond real estate, Birmingham’s growing focus on talent development and business attraction is one of its biggest advantages right now. Groups like the Birmingham Business Alliance, Economic Development Partnership of Alabama and Innovate Alabama, among others, are leading efforts to ensure companies have access to the workforce they need.
Programs like FuelAL, which focuses on retaining top talent, and Birmingham Bound, now expanding statewide to attract tech companies, are gaining traction. These initiatives will support business growth and retention, and as they build momentum, they will help drive demand for office space.
2025 outlook
When you combine all these factors together — increased tenant activity, major investments from top employers, exciting development opportunities and focused talent initiatives — it paints an encouraging picture for Birmingham’s office market. The challenges of higher costs and slower periods of activity are real, but Birmingham’s fundamentals are solid.
I can say with confidence that the future in Birmingham looks bright.
— By William Ledbetter, vice president and partner, Cushman & Wakefield/EGS Commercial Real Estate. This article was originally published in the March 2025 issue of Southeast Real Estate Business.