Broad, diverse economy driving area.

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What area is your expertise?
Office brokerage and development, Birmingham, Ala.

What trends do you see presently in office development in your area?
Class A buildings, but very little supply in 2008.

Who are the active office developers in your area?
EGS Commercial Real Estate, Colonial Properties and Daniel Corporation

Please name one or two significant office developments in your area. What impact will these projects have on the market?
Colonial Brookwood Center, developed by Colonial Properties and located adjacent to Colonial Brookwood Village. Completed in May 2007 and added 150,000 square feet of Class A space to the Midtown market. The building was 100 percent leased at the time of completion.

Where is the majority of development taking place? Why is this area doing well?
The majority of development is taking place in the Midtown submarket, primarily because of its proximity to Birmingham’s upscale residential areas and its access to the Central Business District (CBD).

What area do you expect to be the next big development market? Why?
Suburbs and the Midtown market

What areas are doing well in terms of office leasing? Which areas are struggling with office leasing?
Midtown and Highway 280 are the tightest submarkets currently, both with occupancy rates at 97 percent. The CBD has seen some improvement in occupancy over the last year with the occupancy rate increasing from 84 percent in 2006 to 90 percent at the end of 2007. The lowest overall occupancy in the region remains the Hoover/Riverchase submarket with a rate of 84 percent with mostly older Class B inventory available.

Please give a measure of office vacancy rates. Please give a measure of available sublease space.
CBD — 90.6 percent
Midtown — 96.6 percent
280/Southern — 96.3 percent
Hoover Riverchase — 84.4 percent
Vulcan/Oxmoor — 90.0 percent

What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in the next year?
Interest rates will decrease, which in turn should help development.

What is the status of job growth/(un)employment rates and what bearing will it have on the office market?
A broad, diversified economy is the apparent driver in what is currently a very strong office market in Birmingham. As a result of increased demand, several new major office developments are currently in the planning stages, particularly in the extremely tight Midtown and 280/Southern submarkets.

Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected?
The Birmingham office market has been driven by the bank merger creating a lot of opportunity – continue to see a growing number of law firms. Service industries (insurance, real estate, etc.) will also expand within the next year.

Would you like to make any additional observations about the office market in your area?
Last year was the best year within the last 20 years for the Birmingham office market.

Submitted by R. William Pradat, Jr., SIOR, executive vice president with EGS Commercial Real Estate in Birmingham, Ala. Posted 02/06/08.


R. William Pradat, Jr.

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