2019-08-28_DTZ戴德梁行_Office_Q2_2019_Birmingham,AL_2页_420kb

Birmingham, AL Office Market Q2 2019 Summary

Core Content

This document provides an overview of the Birmingham, AL office market for Q2 2019, highlighting economic indicators, market performance, and key transactions. It is presented by Cushman & Wakefield, a real estate services firm.

Economic Indicators

• Birmingham-Hoover Employment: Increased from 537,000 in Q2 18 to 546,000 in Q2 19.
• Birmingham-Hoover Unemployment Rate: Declined to 3.3% in Q2 19 from 3.6% in Q2 18.
• U.S. Unemployment Rate: Decreased to 3.6% in Q2 19 from 3.9% in Q2 18.
• Alabama's Unemployment Rate: Reached a new record low of 3.5% in June 2019.
• Job Growth: Alabama reported record highs in job count, employment count, and labor force count in June 2019.
• Best Cities for Jobseekers: Birmingham was ranked #4 in Indeed.com's 2019 "Best Cities for Jobseekers" report.

Market Overview

• Overall Net Absorption: Negative 209,841 square feet (sf) in Q2 2019, up from -680,000 sf in Q2 18.
• Overall Vacancy Rate: Increased to 16.9% in Q2 2019 from 15.8% in Q2 18.
• Leasing Activity: 120,967 sf of transactions recorded in Q2 2019, with Class A transactions accounting for 80,004 sf.
• Average Asking Rent: $19.86 per square foot (psf) for the Birmingham market and $20.89 psf for Class A space.
• Submarket Performance:
  • CBD: Overall vacancy rate of 13.7%, with a negative net absorption of 144,031 sf.
  • Midtown: Low vacancy rate of 7.1%, with positive net absorption of 19,249 sf.
  • 280/Southern: High vacancy rate of 20.8%, with a negative net absorption of 94,151 sf.
  • Hoover/Riverchase: Vacancy rate of 18.3%, with positive net absorption of 9,523 sf.
  • Vulcan/Oxmoor: High vacancy rate of 34.7%, with minimal net absorption.

Outlook

• Market Stability: The overall state of the Birmingham office market remains stable.
• Tech Sector Growth: Alabama's positive business climate is driving growth in Birmingham's tech sector.
• New Projects: DC Blox opened a new data center in Birmingham, and McLeod Software opened its new headquarters in Hoover, contributing to market momentum.
• Job Growth: Continued job growth and confidence in Alabama's economic environment are expected to support steady market growth in the second half of 2019.
• New Construction: Build-to-suit projects and significant pre-leasing are anticipated to continue driving new construction.

Key Lease Transactions Q2 2019

• 1901 6th Avenue North: Maynard Cooper & Gale renewed a lease for 118,518 sf.
• 1819 5th Avenue North: Butler Snow renewed a lease for 25,749 sf.
• 1819 5th Avenue North: PNC Bank signed a new lease for 15,309 sf.
• 1901 6th Avenue North: Wells Fargo Administrative Office signed a new lease for 15,000 sf.
• 3000 Riverchase Galleria: ENGS Finance signed a new lease for 7,322 sf.

Key Sales Transactions Q2 2019

• 9001 Liberty Parkway (Encompass Health HQ): Sold for $74,500,000 at $373 per square foot (psf) to CR HQ, LLC and Global Net Lease.
• 2317 3rd Avenue North: Sold for $2,588,500 at $57 per square foot (psf) to Peter L Lowe and Featheringill Capital.
• 2200 Lakeshore Drive: Sold for $8,250,000 at $198 per square foot (psf) to Parkway LLC and Main Street Holding Company.

Summary

The Birmingham office market experienced mixed results in Q2 2019, with overall negative absorption and increased vacancy. However, the broader Alabama economy showed strong growth, with a record low unemployment rate and positive job market indicators. The tech sector in Birmingham is expanding, supported by new developments and company relocations. Key lease and sales transactions indicate ongoing activity, though submarkets like 280/Southern and Vulcan/Oxmoor faced challenges. The market outlook remains positive, with expectations of steady growth in the second half of 2019 driven by continued job creation and new construction projects.