By Chapman Brown of Marcus & Millichap Once renowned for its industrial prowess, Birmingham is experiencing a dynamic retail renaissance fueled by a convergence of local economic growth, strategic development initiatives and shifting consumer behaviors. As major retail projects come to fruition and submarkets heat up with investment activity, the city is poised for a transformative period that promises to redefine its retail landscape. Birmingham’s retail sector is intricately linked to broader economic trends both locally and nationally. Factors such as population growth, employment rates and disposable income levels significantly influence consumer spending habits and retail demand within the city. Additionally, the rise of e-commerce and changing demographics are prompting retailers and developers to adapt and innovate to stay competitive. These factors, combined with a diverse array of buyers and sellers, are driving retail investment activity. Institutional investors, private equity firms and real estate developers are among the key buyers, attracted by the city’s strong fundamentals and growth prospects. On the selling side, property owners and developers are seizing opportunities to unlock value and redeploy capital into new ventures. Several major retail projects are currently underway, poised to leave a lasting impact on the market. One notable project is The …
By David Wilson of Berkadia Birmingham’s apartment market has softened, which is consistent with trends both nationally and regionally in other Southeastern metros. But the market remains healthy and balanced despite a bump in new construction. With total employment gains exceeding 18,000 in 2023, a substantial jump from the 5,500-person gain in 2022, and unemployment rate falling to 2.2 percent, the Birmingham economy is as strong as it’s been in over 10 years, and the economic outlook is very favorable. The majority of population growth has been in the southern areas such as Shelby County, although a steady delivery of new Class A apartments in downtown Birmingham in recent years, and the opening of a Publix grocery in 2017 on the ground level of the 436-unit 20 Midtown development, is helping the city core to grow. Research by Berkadia Birmingham reveals 12 properties comprising 2,936 units are under construction in the Birmingham area, excluding Tuscaloosa. These properties reflect a cross-section of product types such as a purpose-built student property and an affordable Low-Income Housing Tax Credit (LIHTC) property. Four are in their initial site work phase, while another four are beginning preleasing. New developments In the thriving Highway 280 submarket, …
By Brad Jones of Cushman & Wakefield/EGS Commercial Real Estate Despite ongoing challenges facing the national economy, Birmingham’s commercial real estate landscape remains steady and consistent. Over the past seven years, encompassing both pre- and post-pandemic periods, the overall vacancy rate for Birmingham’s multi-tenant office market has exhibited fluctuations like most markets, ranging from 12.9 percent in 2017 to 19 percent in 2023, according to research from Cushman & Wakefield/EGS Commercial Real Estate. However, for perspective, Birmingham’s year-end vacancy rate of 19 percent remains below the national average vacancy rate of 19.7 percent recorded in 2023, according to research from Cushman & Wakefield. Office leasing activity in Birmingham has maintained momentum, experiencing a notable 12 percent year-over-year increase from 2022. Total leasing activity for 2023 totaled 718,219 square feet. Class A transactions dominated with 564,681 square feet leased, indicating a continued preference for Class A office space (i.e. a flight to quality). This is good news for Class A product in this supposed period of economic slowdown. Office investment sales activity in Birmingham has, however, decelerated in the current economic climate. The impending ripple of debt maturities poses challenges for large institutional owners and creditors. At the same time, it …
By Katie Lester of Colliers Nashville’s economy experienced some of the healthiest growth in the nation in 2023, with a job growth rate of 3.7 percent, putting it among the top five of the largest 50 metros. Forecasted by Oxford Economics, overall jobs are projected to grow 1.2 percent in 2024 and by 0.8 percent per year in 2025 through 2028, outpacing the U.S. average of 0.5 percent. Nashville also received high marks from the Urban Land Institute, ranking the “No. 1 Market to Watch” in its 2024 Emerging Trends in Real Estate report. This is the third consecutive year that Nashville has earned the top spot in this ranking, a true nod to the confidence and strength of Nashville’s commercial real estate market. The report credits Nashville and other “Supernova” cities as having above-average levels of economic diversity and high-wage jobs that attract investors’ appeal and confidence in sustaining high growth in the coming years. These fundamentals have been a boon to the retail market and have helped attract new-to-market retail brands to Middle Tennessee. Most notably, after a multi-city, multi-state search over the course of two years, In-N-Out Burger picked Middle Tennessee to locate its Eastern Operations Hub, …
By Jack Armstrong and Joanna Paszek of CBRE The Nashville industrial market remained strong through 2023 despite macroeconomic pressures, fueled by persistent occupier demand and limited availabilities. Occupiers were active in the market with mostly sub-100,000-square-foot requirements, making it vital for owners and developers to consider size segment trends and supply the market based on varying occupier needs. The logistical advantage of Nashville’s geographic location continues to attract occupiers and investors to the market. Three major interstates intersect through the city, and companies can reach 72 percent of the U.S. population within two-day ground delivery. A consistent average of 100 new residents daily and waves of new-to-market companies helped promote a swift post-pandemic economic recovery and illustrate the market’s resilience. An increased presence of electric vehicle (EV) companies is paving the way for significant infrastructure upgrades, bringing high-paying jobs and growing supply-chain demand to support their product distribution. Economic incentives like Tennessee’s FastTrack Program grants for job training and infrastructure development, job tax credits and sales tax exemptions have attracted roughly 2,500 jobs and $2.8 billion of capital investment by EV-related operations to Middle Tennessee since 2020. Together, Nashville’s pro-business environment and status as a place people want to live …
By Stewart Lyman and Robby Davis of Stream Realty Partners Contrary to popular belief, the office market is not dying, particularly not in Nashville. While the market is facing headwinds from the interest rate environment and general economic uncertainty, Nashville has shown resiliency, bolstered by the city’s strong population growth, low unemployment rates, and a vibrant, diverse job market. However, while flight-to-quality has been experienced well before the COVID-19 pandemic, the positive performance of top-tier buildings compared to the rest of the market has accelerated coming out of COVID-19. In 2023, Class A Tier I buildings posted 1.17 million square feet of positive absorption compared to negative absorption of 141,900 square feet and negative 32,267 square feet in Class A Tier II and Class B assets, respectively. Top-tier buildings signed some of Nashville’s largest leases in the past year, such as Creative Artists Agency (CAA) for 75,000 square feet at Nashville Yards, Designed Conveyor Systems for 47,000 square feet at McEwen Northside and JE Dunn for 41,000 square feet at Neuhoff. In the urban core, two of the most high-profile new developments are Neuhoff (Germantown) and Nashville Yards (Downtown), both of which are elevating the tenant experience by delivering best-in-class …
By Tom Kolarczyk of JLL The overall U.S. economic slowdown, rising interest rates and the looming threat of inflation had a negative effect on all segments of Raleigh-Durham’s commercial real estate market last year — and retail was no exception. According to JLL research, there were just 11 retail trades over $5 million between January and December, totaling some $131 million in value. This is a notable drop from the 33 transactions recorded in 2022 valued at $582 million. On the flipside, however, fundamentals remained incredibly strong with occupancies ending out the year at the near record-setting level of 98 percent. This led to leasing spreads of anywhere between 20 and 40 percent on new leases and helped flip the tables to favor landlords for the first time in decades, where getting space back is generally a positive. Rents grew 3 to 6 percent in 2023, with an average year-end asking rate of $24.93 per square foot. This represents a year-over-year increase of 6.45 percent from 2022. While about 80 percent of all retail trades last year were acquired through private capital, an increasing number of REITs are becoming more active via mergers and acquisitions and strategic one-off acquisitions and …
By Lisa Narducci-Nix of Drucker + Falk As a third-party manager of more than 7,000 multifamily units in the Raleigh-Durham metropolitan area, the question we’ve been asked the most lately is, “What do you see for 2024 in terms of rent growth and occupancy?” Alongside other concerning variables such as liability insurance and payroll, rent and occupancy performance seem to be front and center in most conversations. Rents have notably cooled from the unprecedented growth enjoyed most of 2022. According to a multifamily market report on Raleigh by Yardi Matrix, rent growth was negative 0.2 percent in third-quarter 2023 compared to the second quarter and down 1.5 percent on a year-over-year basis. We expect that those numbers represent a market correction of sorts from the unsustainable growth in 2022 as employment and population growth remain strong in the Raleigh-Durham market. In recent headlines, Apple is planning to begin its first phase of its 281-acre office campus, which will add 3,000 jobs at full build-out, and VinFast will begin developing its $4 billion electric vehicle plant in nearby Chatham County in 2025. Additionally, the U.S. Census Bureau found that the population of the Raleigh-Durham MSA grew by 2 percent in 2021 …
By Derek Jacobs of Avison Young Through the financial uncertainty and confusion of the past four years, Raleigh-Durham has stood out as an exemplary industrial market that has strengthened in economic diversity and stability despite greater national and global market trends and challenges. The outlook for Raleigh-Durham is very positive thanks to local and state governments that support business, an excellent central East Coast location and a market environment where industrial demand heavily outweighs supply. Triple-net rents in Raleigh-Durham grew by nearly 39 percent since first-quarter 2020, while total vacancy has remained below 4 percent. The most affordable Class C product has an exceptionally low vacancy rate of 2.7 percent due to lower rent costs outweighing the opportunity costs of moving into a nicer, newer building that will be more expensive in most cases. The newest and most costly Class A industrial product in Raleigh-Durham has also shown strong demand, with a vacancy rate (5.7 percent) lower than the vacancy rate for all industrial product classes combined across the country (6.1 percent). Industrial occupiers and residents in Raleigh-Durham work, do business in various industries and provide services that supply further market growth. Around half of the industrial property in Raleigh-Durham …
While there has been a discernible dip in the volume of industrial leasing activity occurring in the greater Baltimore metropolitan area this past year, optimism remains high among owners and investors of this asset class given the diminishing volume of new product under construction, the still low 7.4 percent overall vacancy rate, record high — yet stabilizing — average asking rents of $10.54 per square foot net and the fact that 10 million people are not likely to soon move away from the Baltimore-Washington, D.C. corridor, the fourth-largest combined metropolitan statistical area in the country. Oh yes, spirits remain high following the Baltimore Orioles’ underdog ride to the top of the American East standings this summer. Never underestimate the power of a professional sports franchise to energize an entire region. The metro Baltimore industrial market consists of more than 3,600 buildings, totaling more than 266 million square feet of space that includes flex and industrial Class A, B and C buildings. Year-to-date, the market has yielded negative absorption of approximately 1 million square feet of space, including nearly 300,000 square feet this past quarter. The bad news of GXO Logistics shuttering a 571,000-square-foot distribution center in Harford County and laying …