We’re proud to have helped the businesses below find their home in Alabama. Now that they are officially open, we encourage you to experience their top-notch customer service and/or their delicious dishes!
In a recent Southpace Properties sales meeting, one of our brokers presented a NNN, free standing, national credit tenant restaurant available for purchase.
The broker was asking an 8 CAP for the deal. Within a few hours, he had five real offers for this well-located property that had a long lease term remaining.
Ultimately, the price got bid up 50 basis points and went under contract for close to a 7.5 CAP rate. So what does this say about the current investment market?
With property management assignments stretching from Hickory, North Carolina to Dallas, Texas, Southpace Management, Inc. strives to provide unparalleled property management and maintenance services throughout the southeast.
In 2014, we began important initiatives to ensure that the property management division is positioned for strategic growth with the right tools of the trade. A new fleet management plan was implemented and already has new maintenance vehicles on our properties.
In 2014, the Birmingham retail market saw new tenants and restaurants, an increase in high-end grocers and the talk of new development. This last year was certainly a good year for the Southpace Retail Division and we look forward to an even better year in 2015.
The overall vacancy rates didn’t change much in 2014, going from 9.8% in the first quarter to 9.7% in the third quarter. However, the market conditions have improved. We’re seeing increased rents and less concessions across all retail markets in Birmingham. I would expect this to continue throughout 2015 due to the lack of available space creating a serious demand among tenants looking to break into the Birmingham market.
Grocery stores in our market continue to be a hot topic, only this year it’s the high-end grocers that are making a splash.
As Alabama’s economy continues to stabilize, Birmingham’s industrial real estate market is sustaining slow and steady occupancy growth. The automotive industry, as well as Alabama’s business-friendly economic climate, continues to drive the industrial sector of the market. The overall occupancy rate of the 14.5 million square feet of multi-tenant industrial space increased to approximately 85%.
Similarly to the last two or three years, we experienced very few individually significant transactions, but actually had a good year, due to the large number of small-to-medium-sized deals that occurred.
Deals with corporate America in central Alabama were few and far between last year. However, many local and regional companies are showing signs of being healthy and confident, which is consistent with other tertiary markets across the United States.
What’s happening locally
I began last year’s office report by posing the question, “Are we finally seeing the end of the tunnel?” I believe we’re closer to the end of the tunnel at this point in time, but we’re not through it yet.
Vacancy levels have improved slightly from where we were this time last year. The 3rd quarter vacancy rate in 2013 was 14.1%. Currently, the Birmingham vacancy rate is approximately 13.4%. To have improved at all this year says a lot about the Birmingham market, based on the fact that we lost several large law firms in 2014. Haskell Slaughter and Johnston Barton both shut their doors this year. Those two firms alone combined for over 100,000 SF in tenant reduction for the market. Even with those tenants being removed from our numbers, we still had a modest decrease in vacancy.
By Bryan Holt, CCIM, CLS
The markets are tightening up. Rents are rising, vacancy rates are dropping and although it’s happening at different rates in different property sectors, we’re moving towards a new phase in the classic development cycle. New development projects will come at a faster pace in 2015.
Last year, this article talked about Learning, Connecting and Leading and how we’d spent much of 2013 serving in leadership roles in professional organizations around the industry. Those leadership roles will continue to evolve through 2015 with Southpace brokers moving into more key leadership positions at the state, regional and national levels in organizations like SIOR, CCIM, RBN and ICSC.
We had a very productive 2014: new brokers, a new property manager, new property management accounts, plus several new business clients. We’re very grateful for this growth. This year we also upgraded our software and bought two new American made vans for our maintenance folks, with plans to buy another in 2015. And as always, we continue to have a polite human being answer our phones Monday – Friday from 8:00 a.m. – 5:00 p.m.
As we now enter our 31st year we feel we have the best team of brokers, property managers and overall staff in the company’s history. We think our future is bright and that Southpace Properties, Inc. will be around for many more years. We believe our sleepy metro Birmingham market is poised for growth with good leadership and the use of common sense.