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 Bray at Liberty Park, a mixed-use development combining retail, residential and recreational spaces. This project is expected to catalyze further growth in the surrounding area, attracting both residents and visitors and creating a vibrant commercial hub.
Among Birmingham’s submarkets, Trussville and Liberty Park stand as hotbeds for retail development. Trussville, the northeastern suburb of Birmingham, has seen considerable residential growth that is driving demand for retail. Developments like the Trussville Entertainment District add to the area’s appeal as a shopping and dining destination. Trussville’s family-friendly environment and increasing population make it a prime candidate for further retail expansion.
With the development of The Bray and ongoing residential growth, Liberty Park in Vestavia is set to become a more significant retail destination. The area’s affluent demographic and the comprehensive planning of mixed-use spaces encourage a balanced growth of retail, residential and commercial properties. With a rising demand and limited supply, these submarkets are witnessing a surge in development activity, driving up property values and rental rates.
As retailers vie for space in high-traffic areas, landlords are capitalizing on the competitive landscape by commanding higher lease rates. However, affordability remains a concern in certain submarkets, posing challenges for retailers seeking to establish a presence in the city.
As a result of the hikes in interest rates, developers and investors might shift strategies, perhaps focusing more on redevelopment or repurposing of existing assets rather than new ground-up development due to the increased costs of financing.
As major projects reshape the city’s landscape and investment activity intensifies, Birmingham is poised to emerge as a dynamic retail destination with opportunities for growth and innovation. By staying attuned to market trends and seizing strategic opportunities, stakeholders can position themselves for success in Birmingham’s evolving retail ecosystem.
— Chapman Brown, senior associate, Marcus & Millichap. This article was originally published in the March 2024 issue of Southeast Real Estate Business.