Market Survey | Huntsville Graham Report 2018 Huntsville, Alabama

2018

MARKET SURVEY | HUNTSVILLE GRAHAM REPORT 2018 HUNTSVILLE, ALABAMA

All sectors of the Huntsville commercial real estate market performed well in 2017, with the office sector having its best year in more than a decade. Industrial and retail markets remained stable with low vacancy rates and an upward trend in rental rates.

Cummings Research Park (CRP), Huntsville’s largest office submarket, was the beneficiary of an increase in defense spending in 2017. This spending increase led to many defense firms needing additional space for an expanding workforce. The office sector had positive absorption of more than 840,000 square feet which helped drive down overall vacancy.

The retail market continued to perform well with vacancy rates falling to 7.49% as new developments began to replace older, outdated projects. Top Golf opened at MidCity Huntsville, the former Madison Square Mall site, and several other projects have been announced. The continued interest and success of mixed-use developments will enhance the Huntsville retail market.

Industrial vacancy declined again to below 6%, and companies are now experiencing a shortage for space in the 25k to 50k square foot range. The need for industrial facilities in west Huntsville near the Greenbrier area continues and overall rental rates have begun to increase.

TABLE OF CONTENTS

Industrial Market Overview ...... 1

Jetplex Industrial ...... 2

North|Central Huntsville Industrial �� 3

Chase Industrial ...... 4

Office Market Overview . . . . . 5

Central Business District Office �� 6

Jetplex | Madison Office . . . . . 7

Cummings Research Park Office �� 8

Cummings Research Park Map �� 10

Retail Map ...... 12

Retail Market Overview ...... 14

Recent Graham Activities . . . . . 17

For Sale or Lease ...... 20

Graham Huntsville Group . . . . .23 2018 [ 23.3 MILLION SF TOTAL ] OVERALL VACANCY 5.97% SINGLE TENANT 4.72% Industrial Market Overview MULTI-TENANT 10.20%

HUNTSVILLE INDUSTRIAL MARKET OVERVIEW

INDUSTRIAL: Huntsville’s 2017 industrial market Industrial Announcements of Note in 2017: vacancy decreased for the 7th consecutive year to 5.97%, • Blue Origin announced plans to build a 400,000 sf the lowest rate since 2001, and has now dropped for plant in Cummings Research Park West on Explorer 26 consecutive quarters. Vacancy rates are expected Boulevard that will be used to construct rocket to continue this decline. engines. The company is an American, privately Lack of new construction is causing a shortage of funded aerospace manufacturer and spaceflight space in the market, thereby increasing rents across company founded by Amazon.com CEO Jeff Bezos. most of the North Alabama region. Rental rates rose The new rocket engines will help power the United again in 2017 to a nationwide average of $6.92 per sf Launch Alliance's Vulcan rocket. as supply-chain and distribution companies’ appetites for space remains strong. Rates are forecasted to • Aerojet Rocketdyne increase again in 2018. announced plans to build a The Huntsville market experienced positive135,000 sf building in North Huntsville near the absorption of 326,000 sf in 2017, marking the 6th year Toyota plant. The company expects to add 700 jobs to in a row of positive absorption. More than 2.5 million the Huntsville market. Aerojet will also be moving its sf have been absorbed in the market since 2012. defense headquarters to CRP. Due to increased demand and construction, average land prices have increased during the last five years. Even though construction prices have increased, new construction for industrial buildings will remain strong in 2018. The industrial investment market has become a favored asset type, and the capital moving into the sector has pushed pricing for building to record levels as cap rates continue to fall. Investment transactions should remain strong in 2018 as rental rates continue to rise.

HUNTSVILLE INDUSTRIAL ABSORPTION

2017 INDUSTRIAL MARKET VACANCY RATES

INDUSTRIAL SINGLE MULTI OVERALL MARKET TENANT TENANT

JETPLEX 7.70% 12.46% 8.81%

NORTH | CENTRAL 4.81% 2.30% 4.24%

CHASE 0% 0% 0%

2017 VACANCY RATE INDUSTRIAL MARKET SF VACANT SF 2013 2014 2015 2016 2017

SINGLE TENANT 18,107,721 SF 855,043 SF 7.78% 3.36% 2.27% 4.7% 4.72%

MULTI-TENANT 5,319,140 SF 542,545 SF 17.52% 27.22% 22.69% 14.28% 10.20%

TOTAL INDUSTRIAL 23,426,861 SF* 1,397,618 SF 10.03% 8.97% 7.06% 6.86% 5.97%

* This number includes some industrial properties that do not fit within a certain submarket, but are an integral part of Huntsville’s industrial landscape.

GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE 1 [ 13.6 MILLION SF TOTAL ] OVERALL VACANCY 8.81% Jetplex Industrial Market SINGLE TENANT 7.70% MULTI-TENANT 12.46%

Vacancy for Jetplex Industrial Park decreased to 65, the plant will allow for quick access to automobile 8.81% in 2017, down from the previous year’s 9.51% companies across Alabama and south Tennessee. rate. Overall vacancy remains low with the largest block of vacant space found in the former 550,000 sf • The former Navistar plant was purchased by an Navistar plant. investor. The new owner of the building is currently Jetplex Industrial Park is Huntsville’s largest marketing the building for lease. industrial base, representing 58% of the Huntsville industrial market, and comprised of several smaller • The former Chesebrough-Ponds building was markets that surround Huntsville International sold to Phoenix Investors, LLC for $5.1 million. The Airport and the Intermodal Center. Jetplex Industrial 359,304 sf building is centrally located in Jetplex Park contains 1,470 acres and offers Foreign Trade Industrial Park and sits on 40.3 acres of land. Zone #83, U.S. Customs Port of Entry and interstate access via I-565. Jetplex South Industrial Park • Jetplex Center, a 145,497 sf multi-tenant industrial contains 1,400 acres and is located just south of building, sold for $5,800,000 to an investment group. Jetplex Industrial Park. Lowe Industrial Park is a 900-acre park originally designed to encompass the • Supreme Beverage moved its North Alabama growth of Intergraph Corporation. operations to SouthPoint Business Park. SouthPoint Park consists of more than 900k sf of industrial space Recent developments: at the I-65 and I-565 interchange. • BOCAR, a Tier 1 automobile supplier, announced plans to build a $115 million plant in Huntsville/ Major area tenants include: Limestone County that will employ more than 300 Kohler, Remington, Yulista, SES, & Georgia Pacific. people. Located on the north side of Bibb Garrett Road in the Greenbrier area and adjacent to Interstate

SUPREME BEVERAGE Supreme Beverage is a third generation, family owned and operated, beverage distributor. Supreme Beverage services 18 counties in the North Alabama area.

2 GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE [ 4.76 MILLION SF TOTAL ] OVERALL VACANCY 4.24% SINGLE TENANT 4.81% North | Central Huntsville Industrial Market MULTI-TENANT 2.30%

Vacancy for the North/Central Huntsville industrial Recent developments in the North/Central market decreased to 4.24% in 2017, down from the Industrial Market: 6.74% posted in 2016. The North/Central Huntsville • The 99,250 sf American Tire Distributors building industrial market is comprised of 4.68 million sf located at 6240 Mastin Lake Road was sold to Setzer and represents 20% of the total Huntsville industrial Forest Products for $66.96 per sf. Graham & Company market. developed the building as a build-to-suit for ATD. Most buildings in this market have smaller square footage footprints than buildings in Jetplex or Chase, Major area tenants include: and many facilities in this market have been recently Toyota, Aerojet Rocketdyne, and Dynetics. constructed along the Highway 53 corridor, providing good access to North Alabama and Southern Tennessee. The tenant mix in the area consists of companies in the automobile industry, local and national service companies, and defense companies.

TOYOTA Toyota’s North Huntsville facility manufactures 4 cylinder, V6 and V8 engines.

GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE 3 [ 5.2 MILLION SF TOTAL ] OVERALL VACANCY 0% Chase Industrial Market SINGLE TENANT 0% MULTI-TENANT 0%

Chase Industrial Park remained at zero vacancy in Major Area Tenants Include: 2017, marking the third consecutive year of 100% J and J South Central, Cinram, PPG Industries, occupancy. Chase represents 22% of the entire Available Plastics, Hart & Cooley, Kommerling, and Huntsville industrial market and was developed by Schwarze Industries. the Madison County Commission.

Chase Industrial Park is comprised almost exclusively of single tenant employers. Comprised of 1,700 acres in northeast Huntsville, only 50 acres remain available for new development. Products manufactured in the park include medical instruments, copper, plastic products, and street sweeping machines.

PPG PPG is a global supplier of paints, coatings, optical products, specialty materials, and fiber glass.

4 GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE [18 MILLION SF TOTAL] OVERALL VACANCY 12.26% SINGLE TENANT 6.32% Office Market Overview MULTI-TENANT 17.53%

HUNTSVILLE OFFICE MARKET OVERVIEW

OFFICE: Vacancy for the Huntsville market fell to 12.26% in 2017, a dramatic drop from 2016’s 16.63%, Office Announcements of Note in 2017: marking the second consecutive year of decreasing • Blue Origin announced plans to manufacture the vacancy rates, and hopefully an end to the defense BE-4 engine in Huntsville. The company plans to recession our office market suffered through from build a new 400,000 square foot building in CRP 2012-2015. Huntsville’s vacancy was below the West. Blue Origin will employ more than 340 people national vacancy rate of 13.20% for the first time at the facility. in many years and vacancies were down in each submarket. • The FBI is expanding its presence on Redstone The office market experienced positive absorption Arsenal. The FBI site on the Arsenal currently consists of 843,657 sf in 2017. This much welcomed positive of 200 acres of land that is being developed to help momentum represents the culmination of several facilitate the Terrorist Explosive Device Analytical factors including an increase in defense spending, Center (TEDAC) program. This expansion could Huntsville’s improved economic diversity, the razing potentially bring 1,500 new jobs to the area. of several obsolete office buildings, and a lack of new construction in the office sector. • Aerojet Rocketdyne broke ground on its new As prices climb and space needs change, a Huntsville plant in North Huntsville Industrial Park slowdown in construction is expected. The shared that will be used to produce engines. These engines space trend in the office market has altered and will be used in several rocket propulsion systems. The decreased the typical square foot per employee ratio. company will employ more than 700 people at the New construction in Huntsville was again slow in plant and at its new location on Explorer Boulevard the CRP market, but several mixed use projects are in CRP. planned or underway in the Central Business District. Rental rates in Huntsville remain steady in Class A and B inventory with annual increases averaging 2.5% to 3%. HUNTSVILLE OFFICE ABSORPTION 2017 OFFICE MARKET VACANCY RATES

OFFICE SINGLE MULTI- OVERALL MARKET TENANT TENANT

CUMMINGS 6.19% 15.78% 9.98% RESEARCH PARK

JETPLEX/ MADISON 8.47% 29.61% 25.79%

CENTRAL BUSINESS DISTRICT 7.31% 14.95% 14.20%

2017 VACANCY RATE OFFICE MARKET TOTAL SF VACANT SF 2013 2014 2015 2016 2017

SINGLE TENANT 8,463,971 SF 535,116 SF 5.09% 10.79% 13.14% 7.87% 6.32%

MULTI-TENANT 9,549,727 SF 1,673,687 SF 25.64% 24.83% 25.03% 24.39% 17.53%

TOTAL OFFICE 18,013,698 SF 2,208,803 SF 15.47% 18.02% 19.31% 16.63% 12.26%

GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE 5 [ 3.5 MILLION SF TOTAL ] OVERALL VACANCY 14.20% Central Business District (CBD) Office Market SINGLE TENANT 7.31% MULTI-TENANT 14.95%

The Huntsville downtown/central business district Recent Developments: (CBD) office market consists of approximately three • Plans for a new city hall are being discussed that million sf and is dominated by the business services would relocate the complex across the street to a sector including law firms, banking, accounting, site that is currently a municipal parking deck. The and real estate companies. City, county, and govern- current city hall site would be razed and possibly ment employees also make the CBD home. replaced by a multi-story office development.

Vacancy in the CBD decreased to 14.20%, down • The Von Braun Center announced a $42 million from the previous year’s 17.22% rate. New develop- expansion that will be funded by an increase in ment and activity in the CBD is high with several lodging taxes. The expansion includes a new 1,200 mixed-use projects under construction. Land sale capacity music hall and a large meeting and banquet transactions and prices have spiked to meet the hall. growing demand for new development. • The 112,986 sf Clearview Cancer Institute was sold to Physicians Realty Trust. The building was built in 2006 and occupies 11 acres of land near downtown Huntsville.

• Torch Technologies continued to expand its foot- print in South Huntsville with the purchase of Office Park South and the 40,500 sf office building at 2001 Nichols Drive. The Nichols Drive building will be integrated into the current Torch campus. Both facilities are strategically located close to the Martin Road entrance of Redstone Arsenal.

Major Area Tenants Include: Regions Bank, Bryant Bank, The City of Huntsville, BB&T, Lanier Ford Attorneys at Law, Bradley, and Huntsville Hospital.

BRYANT BANK Bryant Bank is Alabama owned and operated with 14 locations currently in the state. Bryant Bank’s new main Huntsville office is located in Twicken- ham Square.

6 GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE [1.7 MILLION SF TOTAL ] OVERALL VACANCY 25.79% SINGLE TENANT 8.47% Jetplex | Madison Office Market MULTI-TENANT 29.61%

Vacancy for the Jetplex/Madison office market decreased in 2017 to 25.79%, representing a substantial decrease from the 44.23% rate in 2015. The office market for the City of Madison will be enhanced once the planned Town Madison project is completed.

Madison is one of the fastest growing cities in the State of Alabama and the demand for medical and business services remains strong. Many bank branches and medical related facilities have been built in the Madison market in the last three years. Both Crestwood and Huntsville Hospital now have a presence in Madison.

New Developments: • The Town Madison project continues to move forward along Interstate 565. Part of the project included razing more 600,000 sf of older office space at the former Intergraph campus. Plans call for 700,000 square feet of office space in the Town Madison development. • Boeing continued work on its new 28,000 square foot facility for its Patriot Advanced Capability 3 (Pac 3) missile seeker program.

Major Area Tenants Include: Intergraph, Boeing, Ability Plus, Huntsville Hospital, and Platinum Mortgage.

INTERGRAPH Intergraph Corporation is a software development and services company providing enterprise engineering and geospatially powered software to businesses, governments, and organizations around the world.

GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE 7 [ 12.73 MILLION SF TOTAL ] OVERALL VACANCY 9.98% Cummings Research Park Office Market SINGLE TENANT 6.19% MULTI-TENANT 15.78%

The Cummings Research Park (CRP) submarket Executive Offices (PEO), and major components of the had its best year in leasing velocity in about a Defense Intelligence Agency, and the Missile Defense decade. Overall office vacancy declined to 9.98% from Agency. 14.54% the previous year. Multi-tenant vacancy fell to 15.78%, down substantially from 25.40% in 2016. Recent Developments: Many companies in CRP are defense related and • Dynetics broke ground on a three-building complex depend on the government for funding of military at the United Launch Alliance’s complex in Decatur. projects. The monies allocated for defense programs The facilities will be used to test and develop next greatly improved in 2017, creating a need for many of generation rocket components. The site will enable the companies to expand office space footprints. Dynetics to develop and build the Universal Stage CRP is the largest office market in Huntsville with Adapter for NASA’s Space Launch System. more than twelve million sf, representing more than • The University of Alabama in Huntsville (UAH) 70% of the total Huntsville office market. Cummings purchased the former Executive Plaza office complex Research Park is the second largest research park in in CRP East. Constructed in 1980, Executive Plaza the United States, encompassing 3,843 acres. It is consists of more than 258,000 square feet of one-story home to nearly 300 companies, 26,500 employees, and office buildings on thirty-eight acres of land. The 13,000 students. complex was more than 50% vacant at the time of the Most companies in CRP act in a support role to meet sale. UAH will use the property for future development various demands for military installations located on and expansion of its existing campus. Redstone Arsenal. Redstone is home to the U.S. Army • 990 Explorer Boulevard was purchased by OAR Aviation and Missile Command (AMCOM), the Space Corporation. The 42,700 sf building was owned by and Missile Defense Command, numerous Program a private investor at the time of the sale. OAR plans to take occupancy of the building once the necessary tenant improvements are completed.

8 GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE Cummings Research Park Office Market

• Parsons broke ground on a new 25,000 sf high- bay facility located in Thornton Research Park. The building will be used to assist Parsons with its Department of Defense applications and intelligence agency programs. Parsons is headquartered in Pasadena, California and employs approxamately 500 people in the Huntsville market. • 4900 Bradford Drive was purchased by a local investor for $2,195,000. The property consists of a 30,000 square foot building on 9.59 acres of land and is 100% leased. PARSONS CORPORATION Parsons Corporation focuses on the defense, Major area tenants include: security, and infrastructure markets and delivers Dynetics, SAIC, Adtran, Northrop Grumman, cyber-physical security, advanced technology solutions, and other innovative services to federal, HudsonAlpha Institute, Lockheed Martin, and regional, and local government agencies, as well as numerous other high-tech companies. to private industrial customers worldwide.

CUMMINGS RESEARCH PARK Cummings Research Park is home to nearly 300 companies, including Fortune 500 companies, high-tech enterprises, U.S. space and defense agencies, business incubators, and higher education institutions.

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CUMMINGS RESEARCH PARK RESEARCH CUMMINGS Huntsville Hospital ARSA, P.C. Approx. 310 acres of land are available for development in CRP West. In Boulevard Access Lots order to stimulate economic development and investment, the price of (Lots that have property frontage on and are directly accessible via boulevards) NeXolve / Graham & Co. 565 land per acre in CRP is significantly lower than adjacent property, Lakeside Lots Thornton providing an attractive incentive for new and expanding companies. Outside of official CRP boundaries Research Park Land parcels in CRP West range from four acres (minimum) to 18 acres, University of Alabama in U.S. Army but may also be reconfigured to meet company requirements. For each Acreage depicted on this map should be confirmed with CRP Director if interested. Huntsville Foundation Redstone Arsenal parcel, the City of Huntsville will complete basic site preparation including road access, curbing, drainage, telecommunications, and For more information and undeveloped land prices, contact Erin Koshut at utilities to the site. 256.535.2086 or [email protected] Huntsville International Airport NASA Marshall Space 1/4 Flight Center CummingsResearchPark.com Scale in Miles 0 1/2 3/4 CRP EAST MIDTOWNE Alabama Supercomputer / ON THE PARK Alabama Macro 5 AC Research & General Atomics / 6.75AC Dynetics Field Dynetics 26.79 AC 10.23 AC 9 AC Industries Education Complex IQ 11.96 AC 14 AC MTA / Network Pegasus 21 AC Dynetics Gideon Dynetics

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Rockwell 6.78 AC 103 Wynn Shelbie Research Lab

Dynamics

Collins Cubic GATR 3,843 acres Drive King Hall Technologies 6.08 AC 18.12 AC 6.43 AC Way Voyager Eagle Drive 11.8 million square feet AAR Integrated 9.67 AC Advanced Systems Jan Davis Drive AEgis Northrop Technologies Technology Service Technology 20 AC Technologies 11 AC Grumman CSRA / Trimble / Almost 300 companies total Corporation / MTS (United Technologies) 6.49 AC Trident Technologies / More than 26,000 employees 6.22 AC 8.7 AC ERC / DynCorp International / Cummings Aerospace ExoAnalytic Solutions / 13,258 enrolled college students Raytheon Northrop Booz Allen Hamilton Downtown Huntsville L3 / Company 14 AC Grumman 11 AC Summit 7 Bridge Street Town Centre 8.64 AC 8.2 AC KBRwyle 9.5 AC Old Madison Pike Technology Pointe UAH Defense KBRwyle May 2018 Foundation Parsons Acquisition t Progress Center University Park West s (Zoned DirecTV Center Research Park Office Center e Established in 1962, Cummings Research Park (CRP) is one of the CRP West W

CRP West) s CRP Applications r largest and most-respected research parks in the world. Since its Interior Lots o 18 AC The Bridges n Lake 5 r inception CRP has grown to become the second-largest science and (Lots that do not front Park boulevards, and must be accessed via e v BPI Quality Circle o technology park in the U.S. and fourth-largest in the world. non-boulevard roads) CINRAM Hampton Inn & Suites G Diamond Drive 305 Quality Circle Home2 Suites by Hilton Huntsville Highland CRP, as shown here, encompasses 3,843 acres and includes nearly 12 Boulevard Non-Access Lots Hospital Office Park Catholic million square feet of administration, laboratory, research and (Lots that have property frontage on boulevards, but are accessed from Cabela's non-boulevard roads) High School Huntsville development, classroom and manufacturing space. Hospital ARSA, P.C. Approx. 310 acres of land are available for development in CRP West. In Boulevard Access Lots order to stimulate economic development and investment, the price of (Lots that have property frontage on and are directly accessible via boulevards) NeXolve / Graham & Co. 565 land per acre in CRP is significantly lower than adjacent property, Lakeside Lots Thornton providing an attractive incentive for new and expanding companies. Research Park Land parcels in CRP West range from four acres (minimum) to 18 acres, Outside of official CRP boundaries University of Alabama in U.S. Army but may also be reconfigured to meet company requirements. For each Acreage depicted on this map should be confirmed with CRP Director if interested. Huntsville Foundation Redstone Arsenal parcel, the City of Huntsville will complete basic site preparation including road access, curbing, drainage, telecommunications, and For more information and undeveloped land prices, contact Erin Koshut at utilities to the site. 256.535.2086 or [email protected] Huntsville International Airport NASA Marshall Space Flight Center CummingsResearchPark.com Scale in Miles 0 1/4 1/2 3/4 35773 MEDIAN HOUSEHOLD INCOME

BOB WADE LANE $80,000 & Over $70,000 - $79,999 53 $60,000 - $69,999 $50,000 - $59,999 35757 $40,000 - $49,999 NICK DAVIS RD. NICK DAVIS RD. 35810 JORDAN LANE 231 $30,000 - $39,999 35811 DOUGLAS RD. Less than $29,999 35749 Neighborhood Market 431

WALL TRIANA HWY. TRIANA WALL 35806 JEFF RD.

WINCHESTER RD. SHIELDS RD.

BLAKE BOTTOM RD. PROVIDENCE MAIN ST. POPULATION Strong Station

NANCE RD. 255 PULASKI PIKE 35 mile radius: 701,019 MEMORIAL PKWY Madison County Limestone County CAPSHAW RD. CAPSHAW RD. 50 mile radius: 1,033,470 PLUMMER RD. MASTIN LAKE RD. O L IKE D 72 AND P MO Regional RYL Market: 1,167,317 NR OV IA R D . SPARKMAN DR. (13 county region)

RESEARCH PARK BLVD. RESEARCH PARK HUNTSVILLE, ALABAMA Neighborhood Market MEDIAN HOUSEHOLD UNIVERSITY DR. 35748 72 OAKWOOD AVE. INCOME 35816 The Shoppes of Madison SLAUGHTER RD. 35801 35 mile radius: $53,247 ANDREW JACKSON WAY

. Westside Center D 50 mile radius: $48,968 R

Parkway Place L L I H

G U D Regional Market: $47,940 35758 (13 county region)

BALCH RD. 35741 Source : ESRI GOVERNORS DR. Valley Bend at Jones Farm HUGHES RD.

WALL TRIANA HWY.

BOB WALLACE BOB WALLACE 35756 OLD MADISON PIKE Neighborhood Market 35805 MILL RD. DRAKE AVE. LITTLE COVE RD. COUNTY LINE RD. COUNTY MAJOR RETAIL STORES RETAIL MAJOR

AIRPORT RD.

RIDEOUT RD. RIDEOUT C A R L T . J O The Crossing N E S in Jones Valley DR . (Planned) LEDGES DR.

WHITESBURG DR. For more information contact: 20 FOU R MILE POST RD. Ken Smith, Director

35808 B

A Research & Information Services

I L

E SUTTON RD. OLD 431 HWY

MEMORIAL PKWY MEMORIAL

LILY FLAGG RD. C

. O

D V R Huntsville/Madison County E N I T R R A D M Neighborhood Market . 35802 Chamber 431 One of Forbes Leading Cities for Business... Cities Leading One Forbes of 225 Church Street Huntsville WEATHERLY RD. Huntsville, Alabama 35801 International Redstone Airport 35824 Arsenal 256.535.2026 ZIERDT RD. 231 [email protected] NTAIN OU G M A P R www.HSVchamber.org D . 35763

May 2018

PATTON RD. HOBBS RD. 35773 MEDIAN HOUSEHOLD INCOME

WALL TRIANA HWY. TRIANA WALL 35806 JEFF RD.

WINCHESTER RD. SHIELDS RD.

BLAKE BOTTOM RD. PROVIDENCE MAIN ST. POPULATION Strong Station

RESEARCH PARK BLVD. RESEARCH PARK Neighborhood Market MEDIAN HOUSEHOLD UNIVERSITY DR. 35748 72 OAKWOOD AVE. INCOME 35816 The Shoppes of Madison SLAUGHTER RD. 35801 35 mile radius: $53,247 ANDREW JACKSON WAY

. Westside Center D 50 mile radius: $48,968 R

Parkway Place L L I H

G U D Regional Market: $47,940 35758 (13 county region)

BALCH RD. 35741 Source : ESRI GOVERNORS DR. Valley Bend at Jones Farm HUGHES RD.

WALL TRIANA HWY.

BOB WALLACE BOB WALLACE 35756 OLD MADISON PIKE Neighborhood Market 35805 MILL RD. DRAKE AVE. LITTLE COVE RD. COUNTY LINE RD. COUNTY

AIRPORT RD.

RIDEOUT RD. RIDEOUT C A R L T . J O The Crossing N E S in Jones Valley DR . (Planned) LEDGES DR.

WHITESBURG DR. For more information contact: 20 FOU R MILE POST RD. Ken Smith, Director

35808 B

A Research & Information Services

I L

E SUTTON RD. OLD 431 HWY

MEMORIAL PKWY MEMORIAL

LILY FLAGG RD. C

. O

D V R Huntsville/Madison County E N I T R R A D M Neighborhood Market . 35802 Chamber 431 225 Church Street Huntsville WEATHERLY RD. Huntsville, Alabama 35801 International Redstone Airport 35824 Arsenal 256.535.2026 ZIERDT RD. 231 [email protected] NTAIN OU G M A P R www.HSVchamber.org D . 35763

May 2018

PATTON RD. HOBBS RD. Retail Market Overview [12.6 MILLION SF TOTAL] OVERALL VACANCY 7.49%

HUNTSVILLE RETAIL MARKET OVERVIEW

RETAIL: Land prices have escalated along Highway 72 as Vacancy for the Huntsville retail market declined retailers still seem interested in locating along the again in 2017 to 7.49%, down from the from previous busy road. With higher land prices follows higher year’s rate of 9.10%. Overall retail vacancy has rental rates, and some of the new properties will need decreased for the past three years and is expected to $30 per sf to make projects financially feasible. decrease again in 2018. Publix will be the anchor tenant for The Shoppes The dramatic shift to a more e-commerce at Redstone Square on Zierdt Road. The Town dominated market has forced retailers to adopt Madison development will add more retail to the new strategies to ensure future growth. Many south Madison market over the next three to five consumers have trended for discount retail since years. the Great Recession, especially those products that Vacancy in Huntsville’s largest submarket, can be ordered online. Malls and large strip centers University West, decreased to 6.93% in 2017, have been hardest hit and many large companies, representing a dramatic decrease from 18.74% like Toys R Us, are vacating space. Square footage vacancy in 2015. The razing of the former Madison requirements are being re-evaluated for new and Square Mall seems to have created a catalyst to existing tenants. spur future retail growth. Most retail centers in the Rental rates were flat nationally in 2017 while market are at or close to 100% occupancy. A Jim absorption slowed dramatically. However, rates in ‘N Nick’s BBQ opened at the former TGI Friday’s Huntsville and other growth cities increased in 2017 location. Bridge Street occupancy remained strong and should rise as the local economy continues to with two new restaurants opening in 2017 – Urban improve. Cookhouse and Kona Grill. Vacancy rates decreased in three of five Huntsville North Huntsville vacancy declined to 8.34%. submarkets. Jones Valley increased slightly to a still Planet Fitness moved into the Fountain and that healthy 4.71% vacancy. South Huntsville vacancy property is now 100% leased. Gander Mountain also rose, mostly attributable to road construction vacated space on North Parkway and that space has and one large property struggling with tenancy. not back filled to date. Some new developments The Madison/Hwy 72 market posted a vacancy have occurred in the Hazel Green and Meridianville rate of 6.30% and continues to expand westward markets. Friendship Cove, a multi-use project, was along County Line Road and southward along I-565. announced on Winchester Road across the street

2017 VACANCY RATE RETAIL MARKET TOTAL SF VACANT SF 2014 2015 2016 2017

UNIVERSITY WEST 3,142,697 SF 370,275 SF 19.86% 18.74% 11.78% 6.93%

HIGHWAY 72/MADISON 2,780,223 SF 191,215 SF 7.32% 6.13% 6.88% 6.30%

JONES VALLEY/HAMPTON COVE 2,086,018 SF 92,587 SF 3.0% 3.55% 4.44% 4.71%

SOUTH HUNTSVILLE 2,750,708 SF 220,688 SF 10.70% 10.02% 8.02% 11.20%

NORTH HUNTSVILLE/HARVEST 1,898,159 SF 277,587 SF 19.01% 18.49% 14.62% 8.34%

TOTAL RETAIL 12,657,805 SF 1,152,352 SF 12.92% 12.01% 9.10% 7.49%

14 GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE Retail Market Overview

from the new Wal-Mart. The Huntsville Commons the City Centre in downtown Huntsville with new retail center on Sparkman Drive was sold for $132 per tenants to include Wahlburgers and an artisanal food sf to an out-of-town investor. hall. South Huntsville vacancy increased to 11.20%. The largest vacancies exist in the South Huntsville 2017 Activity: Square property, but this retail center should be Town Madison, a 563–acre mixed use development well positioned for backfilling some vacancies given located along I-565 in south Madison, picked up a the new Grissom High School location and the lot of positive momentum in 2017. Announcements completion of the road project. include a new Home2Suites, a large multi-family Vacancy for the Jones Valley and Downtown project, and a single family residential component markets was healthy at 4.71% in 2017, up slightly called the Heights. from 2016. Many of the new mixed-use developments The MidCity development project has begun in this market, like The Avenue, City Centre and its rollout of mixed-use product. Top Golf and Constellation will offer a retail component as part of the announcement of Dave & Buster's gives the the overall plans for the project. Merchants Square is project two large entertainment venues that should now under construction and has named ULTA and attract a large volume of traffic and attention to the Chuy’s as future tenants. Construction has begun at development. The project will also include retail, multi-family, and an office component. The former Martin Stove building located at 3414 Governors Drive was sold to a local investor for $2,500,000. The 200,604 sf building will undergo a major renovation and will offer office and retail spaces.

MIDCITY HUNTSVILLE Construction continues at MidCity Huntsville. TopGolf, one of the large entertainment venues at MidCity, is open, and a 26,500 sf Dave & Buster’s is scheduled to open July 2019.

RETAIL OCCUPANCY BY TYPE

GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE 15 Retail Market Overview

TOTAL RETAIL SF BY MARKET TOTAL RETAIL SF BY TYPE

Power Center University Highway 72W/ Drive West Neighborhood Madison Anchored 22% 30% 25% 21%

16% Jones Valley/ 5% Enclosed Hampton 19% Mall 15% Cove 22% 24%

North Huntsville/ Harvest South Huntsville Neighborhood Large Box

2017 2017

RETAIL VACANCY RATES BY TYPE

TYPE VACANCY RATE

NEIGHBORHOOD 11.66%

NEIGHBORHOOD/ANCHORED 10.42%

POWER CENTER 6.72%

ENCLOSED MALL 2.62%

LARGE BOX 2.17%

2017

16 GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE Recent Graham Activities

LEASED SOLD

5030 BRADFORD DRIVE HIGHWAY 431 SOUTH

13,143 SF – Intuitive Center, 5030 Bradford Dr 4 Acres – Highway 431 South Huntsville, AL Huntsville, AL Graham represented the Aerospace Corporation in Graham represented the owner in the disposition of leasing space within Cummings Research Park. this land parcel in the Hampton Cove community. Agent: Tyler Fanning Agent: Tyler Fanning

SOLD SOLD

FORMER PNC BANK BRANCH 8503 WHITESBURG DRIVE

3,280 SF – 309 W. Washington Street 13,125 SF – 8503 Whitesburg Drive Athens, AL Huntsville, AL Graham represented the owner in the disposition of Graham represented the buyer in purchasing this this former bank branch office. flex facility. Agent: Tyler Fanning Agent: Bart Smith, CCIM, SIOR

LEASED LEASED

RAS DELIVERY 253 ROYAL DRIVE

20,460 SF – 115 Jetplex Circle 9,375 SF – 253 Royal Drive Madison, AL Madison, AL Graham represented RAS Delivery in its lease of Graham represented the landlord in leasing this this industrial facility. space to XPro Supply. Agent: Jeremy Pope, CCIM, SIOR Agent: Jeremy Pope, CCIM, SIOR

GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE 17 Recent Graham Activities

SOLD SOLD

FORMER GREYHOUND BUS STATION 10382001 RESEARCHNICHOLS DRIVE BOULEVARD

6,127 SF – 601 Monroe Street 40,500 SF – 2001 Nichols Drive Huntsville, AL Huntsville, AL Graham represented the owner in the disposition Graham represented the owner in the disposition of the former Greyhound bus station, located in the of this office building in South Huntsville. heart of downtown Huntsville. Agents: Bart Smith, CCIM, SIOR & Tyler Fanning Agents: Bart Smith, CCIM, SIOR & Tyler Fanning

SOLD SOLD

4900 BRADFORD DRIVE 1020 WINCHESTER ROAD

30,000 SF – 4900 Bradford Drive 12,100 SF – 1020 Winchester Road Huntsville, AL Huntsville, AL Graham represented an investment group in Graham represented an investor in its purchase of purchasing this office facility within Cummings this industrial facility in East Huntsville. Research Park. Agent: Bart Smith, CCIM, SIOR Agent: Bart Smith, CCIM, SIOR

LEASED LEASED

654 DISCOVERY DRIVE 1638 THOMPSON ROAD

53,626 SF – 654 Discovery Drive 122,200 SF – 1638 Thompson Road Huntsville, AL Hartselle, AL Graham represented Dynetics in its lease of this Graham represented the owner in leasing this office building within Cummings Research Park. industrial space to iCool USA. Agent: Bart Smith, CCIM, SIOR Agent: Bart Smith, CCIM, SIOR

18 GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE Recent Graham Activities

LEASED LEASED

BONEAL AEROSPACE CUSTOM ASSEMBLY

124,630 SF – 1000 James Record Road 252,800 SF – 5323 Endeavor Way Huntsville, AL Mooresville, AL Graham represented both landlord and tenant in Graham represented Custom Assembly in its lease leasing this space to Boneal Aerospace. of space at SouthPoint Business Park. Agent: Jeremy Pope, CCIM, SIOR Agent: Jeremy Pope, CCIM, SIOR

SOLD SOLD

108 SKYLAB DRIVE 1000 JAMES RECORD ROAD

10,000 SF – 108 Skylab Drive 359,304 SF – 1000 James Record Road Huntsville, AL Huntsville, AL Graham represented the owner in the disposition of Graham represented the owner in the disposition this industrial facility. of this industrial facility. Agent: Jeremy Pope, CCIM, SIOR Agent: Jeremy Pope, CCIM, SIOR

SOLD SOLD

450 11TH STREET JETPLEX CENTER

94,652 SF – 450 11th Street 145,497 SF – 2995 Wall Triana Highway Arab, AL & 799 James Record Road Huntsville, AL Graham represented the owner in the disposition of Graham represented the owner in the disposition this industrial facility. of this multi-tenant industrial facility within Jetplex Agent: Jeremy Pope, CCIM, SIOR Industrial Park. Agent: Jeremy Pope, CCIM, SIOR

GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE 19 For Sale or Lease

4991 CORPORATE DRIVE HUNTSVILLE, AL AVAILABLE FOR SALE: 181,744 SF • Office/warehouse/lab facility in Cummings Research Park • Adjacent to the new MidCity development • Situated on 14 acres with an additional 4–acre outparcel available

Contact: Jeremy Pope, CCIM, SIOR [email protected] 4991 CORPORATE DRIVE

495 PRODUCTION AVENUE MADISON, AL AVAILABLE FOR SALE: 40,800 SF • Two-story flex building with separately demised east and west sides • 100% conditioned facility • Situated on 2.4 acres within Jetplex Circle Business Park

Contact: Jeremy Pope, CCIM, SIOR [email protected] 495 PRODUCTION AVENUE

799 JAMES RECORD ROAD HUNTSVILLE, AL AVAILABLE FOR LEASE: Up to 60,000 SF • Located in Jetplex Industrial Park • Only 1.5 miles to I-565 • 19' Clear height

Contact: Jeremy Pope, CCIM, SIOR [email protected] JETPLEX CENTER

205 EASTSIDE SQUARE HUNTSVILLE, AL AVAILABLE FOR LEASE: 12,600 SF • Located in downtown Huntsville on the courthouse square • Former law library • 3 story building with open floor plan and roof access

Contact: Bart Smith, CCIM, SIOR [email protected] PHYSICIANS’205 EASTSIDE PLAZA SQUARE

2914 GREEN COVE ROAD HUNTSVILLE, AL AVAILABLE FOR SALE: 85,000 SF • Fully heated and air-conditioned • Situated on 7.73 acres • Excellent accessibility to South Memorial Parkway

Contact: Bart Smith, CCIM, SIOR [email protected] 2914 GREEN COVE ROAD

20 GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE For Sale or Lease

4100 MARKET STREET AT REDSTONE GATEWAY HUNTSVILLE, AL AVAILABLE FOR LEASE: Up to 14,500 SF • Pedestrian friendly, mixed use business environment • Situated at the primary access point of Redstone Arsenal with visibility from I-565

Contacts: Bart Smith, CCIM, SIOR Tyler Fanning [email protected] [email protected]

Jeremy Pope, CCIM, SIOR REDSTONE GATEWAY [email protected]

1241 GNAT POND ROAD LEIGHTON, AL AVAILABLE FOR SALE: 147,500 SF • 100% conditioned facility • 25’ to 33’ ceiling height • Dock high and ground level loading • Situated on 10 acres

Contact: Jeremy Pope, CCIM, SIOR [email protected] 1241 GNAT POND ROAD

7500 SOUTH MEMORIAL PARKWAY HUNTSVILLE, AL AVAILABLE FOR LEASE: Up to 10,000 SF • Unique office/retail opportunity in South Huntsville • Center offers high visibility, convenient ingress/egress, and monument signage opportunities

Contacts: Bart Smith, CCIM, SIOR Tyler Fanning [email protected] [email protected] MAIN STREET SOUTH

997 HIGHWAY 231 SOUTH LACEY'S SPRING, AL

AVAILABLE FOR SALE OR LEASE: 11,250 SF

• Situated on ±7 acres • 16' Clear ceiling height • Ideally suited for a fabrication shop

Contact: Jeremy Pope, CCIM, SIOR [email protected] 997 HIGHWAY 231

805 MADISON STREET HUNTSVILLE, AL AVAILABLE FOR LEASE: UP to 7,000 SF • Located in the heart of the medical district • Space is divisible

Contact: Bart Smith, CCIM, SIOR [email protected]

805 MADISON STREET

GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE 21 For Sale or Lease

WILL MCCOMB DRIVE AT MOORESVILLE ROAD MOORESVILLE, AL AVAILABLE FOR SALE: 50 Acres • Excellent interstate accessibility to I-565 and I-65 • All utility services available • Located in TIF (tax increment financing) District 6 • Less than 4 miles from Polaris and GE Aviation

Contact: Tyler Fanning [email protected] WILL MCCOMB DRIVE

PHYSICIANS' PLAZA AT CRESTWOOD HUNTSVILLE, AL reduced to 40% AVAILABLE FOR LEASE: 1,426 or 4,345 SF • Two-story medical office building on the campus of Crestwood Medical Center • Designated parking for patients, employees and physicians

Contact: Tyler Fanning [email protected] PHYSICIANS' PLAZA

12310 HIGHWAY 231 MERIDIANVILLE, AL AVAILABLE FOR SALE: 4,520 SF • Highly visible location along Highway 231 • Suitable for a variety of uses • Located on a 0.67–acre outparcel of Flint Crossing Market Place, a Publix anchored shopping center

Contact: Tyler Fanning FORMER PNC BANK BRANCH [email protected]

2100 JACKSON AVENUE HUNTSVILLE, AL AVAILABLE FOR LEASE: 15,000 SF • Former Supreme Beverage facility • Building includes 2,600 SF of refrigerated storage area • Centrally located near downtown Huntsville with convenient access to I-565 and Memorial Parkway

Contacts: Bart Smith, CCIM, SIOR Jeremy Pope, CCIM, SIOR [email protected] [email protected] PHYSICIANS’2100 JACKSON PLAZA AVENUE

ZIERDT ROAD - LAND 565 MADISON, AL AVAILABLE FOR SALE: 4.6 Acres • Adjacent to the Edgewater community • Within walking distance of Town Madison and the recently announced minor league baseball stadium • B-2 Zoning; ideal for mixed use or retail development MARTIN ROAD Contact: Tyler Fanning ZIERDT ROAD [email protected]

22 GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE Graham Huntsville Group

BART SMITH, CCIM, SIOR JEREMY POPE, CCIM, SIOR MANAGING BROKER SENIOR VICE PRESIDENT [email protected] [email protected]

JOINED GRAHAM & COMPANY: 2002 JOINED GRAHAM & COMPANY: 2000

AFFILIATIONS/HONORS: AFFILIATIONS/HONORS: • Certified Commercial Investment • Certified Commercial Investment Member (CCIM) designation Member (CCIM) designation • Society of Industrial & Office • Society of Industrial & Office Realtors (SIOR) designation Realtors (SIOR) designation • Alabama Commercial Real Estate Center (ACRE), • Member NAIOP – AL Chapter Leadership Council • Huntsville/Madison County Convention & Visitors Bureau, • Alabama CCIM Chapter, VP of Board of Directors Board Member

• Huntsville Rotary Club, Strive Mentor CLIENTS INCLUDE: • Salvation Army – Advisory Board • AZ Technology • Boneal Aerospace • Custom Assembly • First Methodist Church – Board of Directors • Kaman International • Parksite • Space & Rocket Center • 9 Round Fitness • Intergraph • Huntsville Hospital • CLIENTS INCLUDE: Kuehne & Nagel • Harris Corporation • International Truck • Sanmina-SCI • Northrop Grumman • Cisco • COPT & Engine • Stanley Corporation • Wells Fargo Securities • DirecTV • ATK • MITRE • Dynetics • AEGON • Orbital Sciences • Booz Allen Hamilton • MetLife • Rockwell Collins ERIKA HARLESS REAL ESTATE ASSISTANT [email protected]

TYLER FANNING JOINED GRAHAM & COMPANY: 2004 VICE PRESIDENT [email protected]

JOINED GRAHAM & COMPANY: 2007

AFFILIATIONS/HONORS: • CCIM Candidate (Certified Commercial Investment Member) • Huntsville Rotaract Club, Member • Huntsville Committee of 100 Young Professionals Initiative, Member • Huntsville High School Wrestling Coach

CLIENTS INCLUDE: • MITRE • Prometric • PNC Bank • Aerospace Corporation • Stephen Gould Corporation • Wells Fargo Securities • Southern Research • DRS • LBYD Engineering

GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE 23 Corporate Services

ABOUT GRAHAM & COMPANY Founded in 1978, Graham & Company is a full-service commercial real estate firm based in Birmingham. With offices in Birmingham and Huntsville, Alabama and Jacksonville and the Gulf Coast, Florida, the company offers professional services including sales, leasing, property management (GCP), appraisal, consulting, investment and development. In response to client demand, Graham has systematically extended its range of services and geographic reach, now serving clients throughout Alabama and several surrounding states.

COMMUNITY INVOLVEMENT Part of making our community a better place to live and work is an important tenet of Graham & Company. Our brokers and agents are active with local organizations such as the Salvation Army, Habitat for Humanity, volunteer coaching, church leadership, and land conservation organizations. These good causes reflect a diversity among our associates in the Huntsville office, and our collective commitment to making Huntsville a place we are proud to call home.

AFFILIATIONS NAIOP–Commercial Real Estate Development Association SIOR–Society of Industrial & Office Realtors IREM–Institute of Real Estate Management CCIM–Certified Commercial Investment Member ICSC–International Council of Shopping Centers BOMA–Building Owners and Managers Association LEED–Leadership in Energy and Environmental Design CRE–Counselors of Real Estate Appraisal Institute

INDIVIDUAL MEMBERSHIPS INDIVIDUAL MEMBERSHIPS

24 GRAHAM & COMPANY | 2018 MARKET SURVEY | HUNTSVILLE grahamcompany.com

GRAHAM & COMPANY PERSONNEL - Huntsville, Alabama

CORPORATE OFFICE & INDUSTRIAL MANAGING BROKER Steve Graham MAI, CRE, Chairman Jeremy Pope, CCIM, SIOR Bart Smith, CCIM, SIOR Mike Graham, CCIM, SIOR, President Tyler Fanning REAL ESTATE ASSISTANT Erika Harless

| BIRMINGHAM | HUNTSVILLE | JACKSONVILLE | GULF COAST

1801 Fifth Avenue 1500 Perimeter Pkwy 9440 Philips Highway 100 Richard Jackson Blvd. Suite 300 Suite 150 Suite 1 Suite 115 Birmingham, AL 35223 Huntsville, AL 35806 Jacksonville, FL 32256 Panama City Beach, FL 32407

TEL 205.871.7100 TEL 256.382.9010 TEL 904.281.0003 TEL 850.563.1500 FAX 205.871.3331 FAX 256.382.9011 FAX 904.281.0849 FAX 850.563.1504

Information deemed reliable, but not guaranteed.

Special thanks to Hiroko Sedensky and the Huntsville/Madison County Chamber for providing the Cummings Research Park map and the Major Retail Stores map, pages 10-13. 1500 Perimeter Parkway, Suite 150 Huntsville, AL 35806 TEL 256.382.9010

grahamcompany.com

BIRMINGHAM HUNTSVILLE JACKSONVILLE GULF COAST