Office Market Survey | Birmingham
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2015 OFFICE MARKET SURVEY | BIRMINGHAM “Graham & Company’s expertise has been of significant value to Cadence Bank, especially in our goal of acquiring locations for our new bank headquarters and operations center. We looked to Graham to provide options beyond the obvious and traditional possibilities. Their market knowledge and negotiation skills proved valuable in helping us achieve a successful outcome.” Jennifer Bratton, Director of Corporate Facilities - CADENCE BANK “Impact Family Counseling desired to purchase a larger office building to accommodate its rapid growth and to better serve its clients. The Graham & Company Office Group located an office building not listed on the market for sale in a highly visible area that fit our needs perfectly.” – George Casey, Executive Director • IMPACT FAMILY COUNSELING TABLE OF CONTENTS Overall Market ................ 1 Downtown.................... 2 Midtown ..................... 4 Highway 280 | I-459 ........... 6 Information deemed reliable, Southern | I-65................ 8 but not guaranteed. Vulcan | Oxmoor ............. 10 Copyright 2015. Reproduction, in whole or part, Birmingham Area Map ......... 11 of this report is prohibited. Principals & Office Group ..... 12 Cover: Recent Graham Activities ...... 15 Atrium between Buildings 1 & 2 of Samford University’s recently For Sale or Lease............. 16 acquired 3 building campus located at 2100 Lakeshore Drive Office Services............... 18 Ted Tucker Photography ©tedtucker.com Graham Team................ 20 2015 [ 27.0 MILLION SF TOTAL ] SINGLE TENANT 8,996,124 SF Overall Market MULTI-TENANT 18,043,681 SF BIRMINGHAM OFFICE MARKET OVERVIEW In 2014, the Birmingham area office market contin- and improvements to traffic on Highway 280. Per- ued to show signs of an improved economy and of haps the most exciting turnaround for Birmingham’s a renewed interest to many of its submarkets. The submarkets was that of Vulcan / Oxmoor, which market’s multi-tenant occupancy was 86.01%, up showed great signs of recovery with increased multi- from the two previous years. Multi-tenant absorp- tenant occupancy and positive absorption of 50,187 tion was positive for the second year in a row at sf for the first time in two years. 192,721 sf. The recession of 2008-2011 seems to be in Class-A office sales were the story for 2014, with the rear view mirror for all area submarkets. 11 sales of 17 buildings totaling nearly $280 mil- Birmingham’s Central Business District contin- lion, most selling to out-of-state investors. The office ued to gain attention with new attractions in the market has not seen this type of investment activity area. Regions Field Baseball Park, Railroad Park, the since 2006. Some of the major office buildings sold Uptown district and several new restaurants, shops, included International Park, 3500 Blue Lake, Liber- and entertainment venues have brought new atten- ty Park, and Southbridge. All of these assets are of tion to the submarket and revitalized energy in the high quality and promise to provide strong investor CBD. With more office buildings slated for redevel- returns as they remain some of Birmingham’s best opment or renovation, and more activities to choose office buildings. from in the area, we expect 2015 to be a great year for the CBD. FUTURE: The Birmingham Office Market is poised In the suburbs, Midtown remained the strongest for even more improvement and activity in 2015. submarket with the highest multi-tenant occupancy With the CBD continuing to grow as a hub for not in Birmingham at 94.45%. The Southern / I-65 sub- only office users, but for consumers as well, we -ex market experienced a huge rebound of positive ab- pect to see increased momentum for the submarket. sorption at 126,674 sf, the highest of any submarket. The 280 / I-459 submarket will be one to watch with We predict 2015 to be a strong year for the 280 / I-459 the move of Trinity Hospital, as will Vulcan/Oxmoor submarket with the relocation of Trinity Medical after its turnaround this year. BIRMINGHAM, ALABAMA OFFICE MARKET GRAHAM & COMPANY | 2015 OFFICE MARKET SURVEY | BIRMINGHAM 1 [ 7.8 MILLION SF TOTAL ] Downtown Market SINGLE TENANT 2,845,198 SF MULTI-TENANT 4,964,376 SF In 2014, the CBD continued to see positive effects from multiple downtown revitalization projects. The Regions Field Baseball Park and surrounding Parkside District have taken off, and Uptown Bir- mingham has been a huge success for visitors and residents alike. New restaurants and retail stores have continued to open around some of the CBD’s best office buildings, giving the area great appeal for tenants and investors. In 2014, multi-tenant rental rates remained steady at $20.05 psf, and multi-tenant occupancy de- creased a fraction of a percent to 81.31%. The CBD JEMISON FLATS experienced negative absorption of 31,282 sf. Build- JF Hat, LLC an affiliate of LIV purchased this 89,144 sf office and residential building ing sales were relatively minimal; prominent sales of located at 1827 1st Avenue North. note included the Steiner Building and the Federal Reserve Building. Leases included multiple deals at Renasant Tower and Regions Harbert Plaza. Hand Arendall remained a strong presence in the submar- ket, renewing its lease in 2014 at Renasant Tower. With Downtown Birmingham continuing to grow, we fully expect the submarket to improve through- out 2015 and the immediate future. RENASANT TOWER Several law firms, including Hand Arendall, LLC, leased new space in the recently renamed Renasant Tower. 2 GRAHAM & COMPANY | 2015 OFFICE MARKET SURVEY | BIRMINGHAM DOWNTOWN MARKET 2015 SIGNIFICANT LEASES BUILDING SF TENANT COMMENTS RENASANT TOWER 28,543 HAND ARENDALL, LLC RENEWAL/EXPANSION RENASANT TOWER 19,879 BRESSLER, AMERY & ROSS, PC NEW LEASE SAKS BUILDING 18,000 COYOTE LOGISTICS, LLC NEW LEASE 2317 3RD AVENUE NORTH 14,000 ENROLLMENT ADVISORS, INC. NEW LEASE RUMBERGER, KIRK & CALDWELL, RENASANT TOWER 12,000 NEW LEASE ATTORNEYS AT LAW THE PARAMOUNT 10,000 ACTION RESOURCES/ARI LOGISTICS NEW LEASE CAMPBELL, GUIN, WILLIAMS, FINANCIAL CENTER 7,200 NEW LEASE GUY & GIDIERE, LLC 1600–1606 2ND AVENUE NORTH 6,150 XTREME COMMUNITY EDUCATION SOCIETY NEW LEASE MARTIN BISCUIT BUILDING 5,930 HEARST COMMUNICATIONS, INC. NEW LEASE SIGNIFICANT SALES DATE BUILDING SF PRICE PSF BUYER 5/14 THE PARAMONT 15,000 $1,270,000 $84.67 PARAMONT PARTNERS, LLC 2101 1ST AVENUE NORTH STEINER BUILDING, LLC AND 6/14 25,105 $1,825,000 $72.69 STEINER BUILDING STEINER COMPANY, LLC 6/14 JEMISON FLATS 89,114 $6,300,000 $70.70 JF HAT, LLC AN AFFILIATE OF LIV 7/14 FORMER DEPARTMENT OF REVENUE 19,500 $350,000 $17.95 SWBP COLONNADE, LLC BIRMINGHAM BRANCH 8/14 89,642 $1,350,000 $15.06 FR BHAM, LLC FEDERAL RESERVE BANK OF ATLANTA 11/14 FORMER OMNI STUDIO 48,000 $660,000 $13.75 BLUE TONGUE DEVELOPMENTS, LLC GRAHAM & COMPANY | 2015 OFFICE MARKET SURVEY | BIRMINGHAM 3 [ 5.02 MILLION SF TOTAL ] Midtown Market SINGLE TENANT 901,053 SF MULTI-TENANT 4,122,743 SF As the strongest submarket in the Birmingham area, Midtown continued last year’s turnaround with positive absorption and high occupancy. The 2014 average multi-tenant rental rate for Midtown was $21.62 psf and multi-tenant occupancy was at 94.45%, up 1.14% from last year. Absorption was positive once again at 46,942, proving the steady growth of the area. Multiple high dollar sales were the focus of 2014. Brookwood Village, Lakeshore Park Plaza and Southbridge made up some of the top sales. All of these trophy assets were purchased by out-of-state SOUTHERN PROGRESS CAMPUS investment groups. Independence Plaza also sold Samford University purchased three office buildings totaling 368,374 sf, the adjoining in 2014 to a local investment group, and the South- parking structure and 28 acres located directly ern Progress Campus sold to Samford University. next door to its existing campus. Leases at Brookwood Center helped contribute to the increase in occupancy. With high occupancy, quality office buildings, and its desirable location, Midtown is the most likely candidate for future office development. LAKESHORE PARK PLAZA An out-of-state investor purchased this well located 196,871 sf Class-A office building in the Midtown submarket. 4 GRAHAM & COMPANY | 2015 OFFICE MARKET SURVEY | BIRMINGHAM MIDTOWN MARKET 2015 SIGNIFICANT LEASES BUILDING SF TENANT COMMENTS 2100 LAKESHORE DRIVE 156,000 TIME, INC. NEW LEASE COLONIAL BROOKWOOD CENTER 47,870 SURGICAL CARE AFFILIATES, LLC NEW LEASE FIRST COMMERCIAL BANK 26,000 WALLACE JORDAN RENEWAL COLONIAL BROOKWOOD CENTER 16,462 PRICEWATERHOUSECOOPERS, LLP NEW LEASE 880 BUILDING 15,439 MOMENTUM TELECOM, INC. NEW LEASE LAKESHORE PARK PLAZA 10,337 TELVENT DTN, LLC RENEWAL SOUTHBRIDGE 9,740 MAULDIN & JENKINS EXPANSION/RENEWAL MONTCLAIR REHAB & PHYSICIAN’S CENTER 9,453 TRINITY MEDICAL CENTER NEW LEASE 2101 HIGHLAND AVENUE 7,500 NEW CAPITAL PARTNERS NEW LEASE SOUTHBRIDGE 6,000 HERITAGE BANK OF THE SOUTH NEW LEASE 2931 2ND AVENUE SOUTH 5,192 CAYENNE CREATIVE NEW LEASE 1911 27TH AVENUE SOUTH 5,000 BIRMINGHAM EVENTS NEW LEASE SIGNIFICANT SALES DATE BUILDING SF PRICE PSF BUYER 2/14 600 UNIVERSITY PARK PLACE 122,654 $19,700,000 $160.61 SAMFORD UNIVERSITY 3/14 2956 RHODES CIRCLE SOUTH 9,810 $750,000 $76.45 PEEPLES HOLDINGS, LLC BROOKWOOD VILLAGE $217.65 4/14 170,000 $37,000,000 CYPRESS EQUITIES OFFICE BUILDING (ALLOCATED) SHANNON WALTCHAK INVESTMENT 4/14 INDEPENDENCE PLAZA 106,555 $15,100,000 $141.71 REAL ESTATE, LLC 6/14 2160 HIGHLAND AVENUE 20,000 $1,900,000 $95.00 3529 REALTY GROUP 7/14 3529 7TH AVENUE SOUTH 12,752 $950,000 $74.50 AIDS