Montgomery’s commercial real estate industry is repaving the rocky road of the recession. The small capital city is fairing well, fueled by the state government, the Maxwell-Gunter Air Force Base and the car manufacturer Hyundai. Montgomery’s transportation options also make the area attractive; two major highways intersect in the city, and the Alabama River provides a shipping alternative for sea-fairing businesses.
According to Jerome Moore of Montgomery-based Moore Company Realty, manufacturing helps fuel local commercial real estate because industrial activity boosts the multifamily and retail markets. The tight financial markets have affected the resiliency of the industrial market, however, and warehouse vacancy is now a little more common that it was before.
The office market remains strong on the heels of government expansion. The one dark area hovering around the industry concerns the financial meltdown and the ever-changing banking landscape. “All the shakeup there, with the merger of Regents and AmSouth [banks] and Colonial’s present troubles, will create significant vacancy in the market from an office standpoint,” he says.
Many office buildings were developed with significant vacant space. If a landlord purchased a building that was vacant, he’s having a hard time filling the property, but the recession hasn’t created a mass tenant exodus away from office developments. “There’s not anybody sitting on what once was a fantastic investment and because of today’s market conditions is all of a sudden going, Oh my God, what happened to me?” Moore says.
In the development arena, Montgomery officials are focusing on two issues: reinvigorating blighted areas of the city and creating a vibrant downtown sector. The importance of the first prong is obvious, and the second issue, Moore says, is aimed at attracting 20-somethings to downtown by developing bars, restaurants and entertainment spaces. “If they’re going to come to a town and they don’t have a place to go to socialize and meet other young people, they’re not coming to the town,” Moore says.
It will take time for a thriving downtown to take root — Moore predicts downtown Montgomery will be a destination in less than 2 years — and many of the problems seen throughout the Southeast have appeared in Montgomery. Taking everything into account, however, commercial real estate in Montgomery is doing fine.
“This is not, in any shape or form, a bloodbath,” Moore says. “There’s hardly any blood in the water.”
— Jon Ross