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Southeast Market Reports

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Birmingham’s Office Market: Steady, Resilient and Ready for What’s Next

by John Nelson

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 …

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AlabamaMarket ReportsRestaurantRetailSoutheastSoutheast Market Reports

Birmingham Retail Market: Stability Amid Changing Dynamics

by John Nelson

Birmingham’s retail market continues to demonstrate resilience despite national economic challenges. With a vacancy rate of 3.8 percent — slightly below the national average of 4.1 percent — and rental rates holding steady at $13.13 per square foot, the city remains an attractive destination for both investors and tenants.  However, rising interest rates have slowed development and softened transaction volumes, reshaping the investment landscape. Macroeconomic trends  The intersection of economic pressures and shifting consumer habits is redefining Birmingham’s retail landscape. Across the nation, big-box retailer bankruptcies have contributed to negative net absorption of 346,200 square feet over the past year, and Birmingham has felt similar effects. The closure of Conn’s HomePlus, among other retailers, has contributed to this contraction. Despite these challenges, suburban retail demand remains robust. Homewood, Hoover and Alabaster are experiencing continued growth, and Crestwood Festival Shopping Center has added new tenants like Fun City Adventure and Armor Gym occupying 100,000 square feet. These trends highlight the increasing popularity of experiential retail, as consumers gravitate toward destinations that offer more than just traditional shopping. Development slows New retail construction has slowed significantly, with only 130,000 square feet delivered in the past year — well below historical averages. However, …

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AlabamaIndustrialMarket ReportsSoutheastSoutheast Market Reports

‘Clouds Are Clearing’ for Next Step of Birmingham’s Industrial Market

by John Nelson

The Birmingham industrial market is poised for an increase in absorption as the apex of higher interest rates seem to be settling down, not to mention the post-election certainty that now favors business expansion. Corporate America is waking up and the clouds are clearing.   For the past 24 months, the competitive set of investor-controlled warehouse space has been sitting on about 2 million square feet of inventory. About 550,000 square feet of that is still unleased speculative space in three different projects delivered at the back-end of the post-COVID development wave that did see about 700,000 square feet of absorption of new spec space before the music metaphorically stopped.  Then came the 2023/2024 wave of the “new spec space,” a byproduct of the mentioned interest rates and COVID over-correction. Several second-generation spaces are now being marketed as companies vacated or downsized for various reasons. For example, discount retailer Dollar General is vacating an entire 307,000-square-foot warehouse.  Broader, there have been two major announcements in Central Alabama for the closure of distribution centers, both as a result of retailers’ bankruptcies. JoAnn Fabric’s 700,000-square-foot distribution facility in Opelika at I-85 is now on the market as is the 1.2 million-square-foot former …

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AlabamaMarket ReportsMultifamilySoutheastSoutheast Market Reports

Limited Construction Starts Should Help Birmingham Absorb Available Apartments in 2025

by John Nelson

Southeast Real Estate Business recently caught up with John McCrary, director of investment sales in Berkadia’s Birmingham office, to discuss trends in the local apartment market. McCrary, who specializes in investment sales in Alabama, east Tennessee and southern Mississippi, says that Birmingham’s occupancy will likely take a hit as new deliveries hit the market in the first half of the year, but there’s optimism that renters will be able to absorb those availabilities in short order. “With approximately 800 units expected to be delivered at the beginning of 2025, vacancy rates are likely to rise throughout the year,” says McCrary. “However, the slowdown in construction starts should help absorb existing units and eventually reduce the elevated vacancy rate.” The following is an edited interview: Southeast Real Estate Business: What major local or macro-economic trends are affecting the multifamily market in Birmingham?  John McCrary: The interest rate environment is a key factor influencing multifamily dispositions, both in the Southeast and nationwide. Fluctuations in interest rates impact borrowing costs for developers and investors, thereby affecting the supply and demand for multifamily properties. Over the past year, Birmingham has seen strong multifamily demand, but it hasn’t kept pace with the influx of new …

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Market ReportsMarylandRestaurantRetailSoutheastSoutheast Market Reports

From the Suburbs to the City: The Retail Revolution is Reshaping Baltimore

by John Nelson

Baltimore’s retail market is alive and well and has experienced something of a boom in retail activity, driven in large part by the thriving retail hubs in the city and in the surrounding suburbs. Demand for space continues to be robust and prospective tenants and investors alike are excited to be part of the Baltimore market.  But the reasons why are more nuanced than simply piggybacking off the overall growth that brick-and-mortar retail is seeing across the country.   Baltimore is a bargain One of the causes is the terrific value that Charm City offers when comparing prices to the major metropolises of Washington, D.C., to the south and Philadelphia to the north. The Baltimore MSA offers attractive demographics and strong retail fundamentals, making it a prime target for local, regional and national investors.  A great example is the sale by KLNB’s Retail Capital Markets team of Arbutus Shopping Center in fall 2024, a 88,000-square-foot, grocery-anchored center that attracted significant demand due to its Baltimore County location, sub-$20 million price point and the broader market’s interest in grocery-anchored retail assets. Due to these robust conditions and factors, among other reasons, owners are hesitant to sell — despite the substantial interest …

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IndustrialMarket ReportsMarylandSoutheastSoutheast Market Reports

Key Bridge Collapse Puts Infrastructure, Baltimore Industrial Market’s Fundamentals in Focus

by John Nelson

A major attraction within the Baltimore industrial real estate market has historically been the Port of Baltimore, as it is the most inland port on the East Coast, ranks in the top 20 nationally for tonnage and top 10 for dry bulk and attracts users and investors for its impressive capabilities. Closing on the end of first-quarter 2025,  here are a few noteworthy project and market updates: March 26, 2024: The Key Bridge collapsed due to a physical collision from the container ship Dali. The bridge collapse was a tragic event with six lives lost and shipping (both in and out) being blocked for nearly three months as crews cleared the debris. $2B Key Bridge rebuild: Maryland Gov. Wes Moore unveiled the new design for rebuilding the bridge in February. The bridge is anticipated to deliver by fall 2028 and comes with enhanced capabilities, such as a 45-foot height increase and a 300-foot width increase for the shipping channel when compared with the previous design. Kiewit Infrastructure estimates the overall project will cost $2 billion. Howard Street Tunnel: As part of nearly $500 million directed toward local infrastructure projects, CSX recently kicked off the long-awaited Howard Street Tunnel project being …

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Market ReportsMarylandOfficeSoutheastSoutheast Market Reports

Green Shoots Are Emerging for Baltimore’s Office Market

by John Nelson

The national office market continues to face headwinds in the wake of the COVID-19 pandemic, and Baltimore is no exception. Shifting tenant preferences and the city’s evolving economic landscape have created challenges, with rising vacancy rates in some submarkets. However, recent trends suggest that Baltimore’s office sector is stabilizing, with positive momentum in key areas. Changing office landscape For decades, Baltimore’s office market was defined by two primary submarkets: the traditional central business district (CBD) that is centered around Charles, Saint Paul/Light and Baltimore streets, and the Inner Harbor. The CBD was home to corporate giants such as Alex. Brown & Sons (now part of Deutsche Bank), USF&G (now part of St Paul Insurance), T. Rowe Price and Maryland National Bank (now part of Bank of America). In the 1980s, the Inner Harbor emerged as a national model for waterfront redevelopment, attracting major tenants and commanding some of the city’s highest occupancy rates. The early 2000s saw another shift with the rise of Harbor East and later Harbor Point, both of which drew high-end office tenants and further pulled demand toward the waterfront. More recently, Baltimore Peninsula has emerged as the next major office and mixed-use submarket.  Historically, vacancies created …

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Market ReportsNorth CarolinaOfficeSoutheastSoutheast Market Reports

The Faucet Is Back On for Raleigh-Durham’s Office Market

by John Nelson

Raleigh-Durham’s office market entered the year on a positive note as 2024 ended strong. Vacancy was largely flat in the fourth quarter, net absorption neared 300,000 square feet and move-outs were sparse. After years of uncertainty and short-term renewals dominating the landscape, companies are now committing to longer leases. Clarity around business drivers, a growing labor pool and new market entrants are all contributing factors to this decisive turn. Firms are confidently making long-term real estate decisions, bringing lease terms back to the five- to 10-year range. While the vibrancy of the pre-pandemic era has not fully returned, data shows a steady recovery throughout 2024, and 2025 is poised to bring even stronger growth. In 2024, Raleigh-Durham welcomed several notable commitments from companies establishing a foothold in the market, like Jewelers Mutual, JTL and Amgen.  Leasing activity stayed strong through the fourth quarter, supporting the net absorption of nearly 160,000 square feet of office space over the course of the year. Rents have seen some downward corrections overall, but well-located, highly amenitized assets have retained rent stability. Recent recommitments from major companies like Nutanix and Hitachi highlight the area’s enduring appeal. Vacancy closed out December at 17.3 percent but was …

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Market ReportsNorth CarolinaRetailSoutheastSoutheast Market Reports

Sweetwater Town Center Is a ‘Place to Exhale’ in Bustling Raleigh-Durham Area

by John Nelson

The secret is getting out about Apex, a western suburb of Raleigh that also lies 20 miles south of Chapel Hill. In 2018, Realtor.com ranked the city as the No. 1 fastest growing suburb in the United States. This was aided by the master planning of local homebuilder/developer ExperienceOne Homes, which debuted its large-scale Sweetwater residential development in 2016. The allure of Apex didn’t stop there as the local schools within the Wake County Public School System have long been considered top-notch. As more and more families moved to the once-sleepy town, the need for community-serving retail became apparent. And not just any sprawling shopping center would suffice. Retail Strategies of N.C. Inc., on behalf of development partner The Kalikow Group, a multifamily and mixed-use development firm based in Westbury, New York, and the aforementioned ExperienceOne, set out to create a sense of place that would resemble village towns in Northeast states such as Maine and Massachusetts. What all of these hamlets have in common is they are built up over decades around a town center, thus the idea of Sweetwater Town Center was established. East Side The “hard part” was essentially in the rearview mirror as ExperienceOne had already …

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Market ReportsMultifamilyNorth CarolinaSoutheastSoutheast Market Reports

Multifamily Operators in Raleigh-Durham Strive to Maintain Profitability

by John Nelson

For all Top 50 NMHC third-party management firms, the subject of managing rising operating costs is a topic that has come to be front and center in many recent client conversations.  “As 2025 budget discussions were taking center stage toward the end of 2024, our clients increasingly highlighted the issues of rising operating costs,” says Lisa Narducci-Nix, director of business development at Drucker + Falk.  “This trend”, she adds, “underscores our need for strategic planning and cost management to navigate the continued challenges ahead.”  The multifamily sector is facing unprecedented headwinds as operating costs continue to rise, driven by factors ranging from inflation and labor shortages to increased insurance premiums and energy expenses. As a result, multifamily operators are working to find ways to maintain profitability while providing quality living spaces for their residents.  “In this challenging environment, it is clear to us that adapting to these rising costs will require a multifaceted approach — one that blends innovation, strategic marketing, operational efficiency and technological adoption,” says Narducci-Nix. Challenges of rising costs Across its 11-state footprint spanning over 42,000 units, Drucker + Falk has seen operating costs for many of its managed assets surge in recent years. The supply chain …

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