THE1 Graham Office GRAHAM Market Survey REPORT INDUSTRIAL MARKET SURVEY 2020 1 Graham Report 2020 | Birmingham | Industrial Market Survey EXECUTIVE SUMMARY ABSORPTION AVAILABLE SPACE -72,000 21,000 675,000 770,000 321,000 4,494,000 2,500 8,000 7,000 2,000 6,000 1,500 5,000 1,000 4,000 SQUARE FEET I x 1000 SQUARE FEET I x 1000 3,000 500 2,000 0 1,000 -500 0 2015 2016 2017 2018 2019 RENTAL RATES OCCUPANCY RATES $4.41 $7.16 93.7% 89.3% 95.5% $8.00 100% $7.00 95% 90% $6.00 PER SQUARE FOOT 85% $5.00 80% $4.00 75% $3.00 70% LEGEND: BULK DISTRIBUTION OFFICE WAREHOUSE INDUSTRIAL Large space, 20,000 SF and up; Typically buildings with 12' to 18' Typically owner occupied buildings generally 20’ to 32’ clear ceilings, ceilings, drive-in or dock high doors with 12' to 18' ceilings, drive-in or dock sprinklered, dock-high loading, often and approximately 20% to 40% office. high doors and approximately 20% to rail served and approximately 5% office 40% office. Executive Summary Continuing the trend from 2018, the As we enter a new decade, the US economy As always, our successes correlate to the Birmingham metro’s overall industrial real is in its 11th year of economic expansion, confidence from our relationships with our estate market experienced slight negative the longest in history. Despite a general clients, vendors, investors, and colleagues. absorption for multi-tenant properties and consensus that a recession was eminent in Thanks for a good 2019 and we wish modest positive absorption for single- 2019, GDP experienced 2% annual growth, continued success for all as we enter the earnings growth beat expectations each tenant buildings in 2019. Multi-tenant new decade. quarter, 10-year treasury dipped to a record occupancy rates dipped by less than 0.5%, low of 1.47%, and the country continued to with an average rate of 92.8% at the end of experience record low unemployment rates. 2019. Single-tenant occupancy remained Consumer confidence was strong in the static at 95.5%. The Western submarket first weeks of 2020, however uncertainty was the top performer of the year, posting levels are rising amongst investors as the 147,500 sf of positive absorption. Rental COVID-19 virus begins to spread around rates experienced continued upward the globe. It remains to be seen how this pressure, especially in the office warehouse election cycle will impact the economy, but sector, which increased by nearly $0.50 per some pullback is anticipated during the square foot. second half of 2020 as investors wait to see how the political landscape unfolds. Mike Graham, CPM, SIOR Steve Graham, MAI, CRE FREESTANDING TOTAL MULTI-TENANT BULK OFFICE/ ALL AREAS INDUSTRIAL BLDGS. WAREHOUSE MARKET DISTRIBUTION WAREHOUSE Occupancy Rate 95.5% 92.8% 93.7% 89.3% EXECUTIVE SUMMARY ...................... 2 Status Tight Balanced Balanced Balanced COMMENTARY ............................. 3 Available Space 4,494,000 1,091,000 770,000 321,000 INDUSTRIAL GROUP ........................ 4 Total Market 99,378,000 15,223,000 12,233,000 2,989,000 CENTRAL.................................. 5 Average Rate PSF -- -- $4.41 $7.16 OXMOOR .................................. 9 New Space Rate PSF -- -- $5.25 $9.50 WEST .................................... 13 Absorption: SOUTH ................................... 17 2019 675,000 (51,000) (72,000) 21,000 BUILDING LOCATIONS (CITY MAP)........... 19 2018 799,000 (144,000) (89,000) (55,000) 2017 2,509,000 525,000 409,000 116,000 EAST .................................... 23 2016 2,009,000 400,000 198,000 202,000 INDUSTRIAL BUILDINGS .................... 26 2015 (300,000) (61,000) 77,000 (138,000) FOR SALE OR LEASE....................... 28 Annual Absorption: GRAHAM & COMPANY ACTIVITIES/2019 ...... 35 5 Yr Average 1,138,400 133,800 104,600 29,200 GRAHAM TEAM ........................... 37 2 Graham Report 2020 | Birmingham | Industrial Market Survey EXECUTIVE SUMMARY 3 Graham Report 2020 | Birmingham | Industrial Market Survey COMMENTARY COMMENTARY Real Estate as a Service At Graham & Company, we persistently look for new ways to meet the ever-changing needs of our clients. In the 1990’s, the Office division was created to serve our clients across a broader range of asset types. At the turn of the millennium and through the following decade, we expanded our geographic horizons, establishing offices in Huntsville and Florida’s Gulf Coast. In the 2010’s, our brokers began collaborating as team units, management arena as another way to diversify our services and providing our clients an even more expansive knowledge-base meet all aspects of our clients’ real estate needs. to tap into. As we usher in this new decade, Graham & Company We are excited to see what this next decade brings, and look continues to expand its range of services offered, in order to forward to serving our clients in new ways to help achieve their further align our clients’ business and investment goals with the real estate goals. rapidly-evolving commercial real estate landscape. While much of the commercial real estate industry has consolidated, Graham & Company has chosen to grow organically in the market. This freedom from external influence affords us the flexibility to offer more creative solutions to our clients’ problems, as well as follow them geographically. In 2019, Graham & Company closed deals in Texas and Utah for clients looking to broaden their investment criteria, in order to put capital to work. In addition to expanding its geographic reach, Graham & Company launched its Corporate Services division in 2019, and is equipped to manage even the largest portfolios of properties located throughout the United States and beyond. This service enables the client to focus on its core competencies and leave managing a real estate portfolio to the professionals. On a more granular level, Graham & Company has re-entered the property INDUSTRIAL GROUP OF GRAHAM & CO JACK BROWN, SIOR OGDEN DEATON, SIOR SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT INDUSTRIAL GROUP INDUSTRIAL GROUP JOINED GRAHAM & CO: 1996 JOINED GRAHAM & CO: 1987 AFFILIATIONS/HONORS: AFFILIATIONS/HONORS: • SIOR Industrial Specialist • Graham & Co. 30 year service • Member NAIOP – Alabama award Chapter President 2011 • Numerous “Top Producer” awards by the Birmingham Association of • Birmingham Business Alliance, SONNY CULP, SIOR Realtors, as well as transaction Board Member 2011 SENIOR VICE PRESIDENT recognition by NAIOP and the • Birmingham Association of Realtors Vulcan Award 2006 INDUSTRIAL GROUP Birmingham Business Journal • SIOR Industrial Specialist Designation 1994, CLIENTS INCLUDE: JOINED GRAHAM & CO: 1986 Chapter President 2007 • ABC Supply • Motion Industries • CSX Railroad • Ferguson • Member NAIOP – Alabama Chapter AFFILIATIONS/HONORS: Enterprises • Magna International • MacLean-Fogg • Nucor • Birmingham Association of Realtors • Graham & Co. 30-year Steel • Regions Financial • National Bank of Commerce • Vulcan Award, 20-Year Award Service Award, 2016 Cintas • SafeLite • US Auto Logistics • Averitt Express CLIENTS INCLUDE: • Numerous “Top Producer” awards • BNSF Railway • Rainbird • Georgia Pacific • AT&T • Balfour by the Birmingham Association of Beatty • ThyssenKrupp • McWane Pipe • STAG • Wells Realtors, as well as transaction Fargo • Voestalpine • Caterpillar • Real Capital Solutions • recognition by NAIOP and the Summit Investment Management • BLG Logistics Birmingham Business Journal • Zekelman Industries • Coca-Cola Bottling Company • SIOR designation 1992, Chapter President 2001, United • W.P. Carey Regional Director 2007 JOHN COLEMAN, SIOR • Board Member, Restoration Academy JORDAN TUBB, SIOR SENIOR VICE PRESIDENT www.restorationacademy.org VICE PRESIDENT INDUSTRIAL GROzvvUP INDUSTRIAL GROUP • Board Member, Center for Executive Leadership JOINED GRAHAM & CO: 2006 www.cfel-al.org JOINED GRAHAM & CO: 2007 AFFILIATIONS/HONORS: CLIENTS INCLUDE: AFFILIATIONS/HONORS: • SIOR Industrial Specialist • Mercedes-Benz • Norfolk Southern • Michelin • Sysco • SIOR Industrial Specialist Foods • Ford Motor Land • Isuzu Corp • Cardinal Health • Member NAIOP – Alabama • Birmingham Association of Chapter Board Member & • Nabisco • Frito Lay • Graybar • UPS • SKF USA • ProLogis Realtors, Rookie of the Year Program Chair 2006-2008 • Coca-Cola Bottling Company United • Hackman Capital Award 2008, Life Member Award 2011 • Eyesight Foundation of Alabama, Board Chair • NAIOP – Alabama Chapter Board • Kiwanis Club of Birmingham Member (2013-2017), Developing Leaders • National Multiple Sclerosis Advisory Council 2011 Chairman (2015-2016), Treasurer (2017) • Member, Rotaract Club of Birmingham CLIENTS INCLUDE: CLIENTS INCLUDE: • Evonik • CJ*GLS Logistics • DeShazo Crane • Durect Corp • Roto-Rooter • Unified Design & Manufacturing • Regions • Fleetpride • Georgia Pacific • US Steel • TSF Sportswear • Carboline • Tennessee Valley Metals • Sears Home • Jay Electric • McWane Pipe • Hilco • Samford University Improvement Products • Hackman Capital Partners • Express Oil • Carroll Tire • Rite Aid • Hackbarth Delivery Service • Charter Communications • Vulcan Industrial Contractors 4 Graham Report 2020 | Birmingham | Industrial Market Survey INDUSTRIAL GROUP 5 Graham Report 2020 | Birmingham | Industrial Market Survey CENTRAL ABSORPTION AVAILABLE SPACE -84,000 -1,000 411,000 35,000 200 700 150 600 100 500 50 400 0 SQUARE FEET I x 100 SQUARE FEET I x 1000 300 -50 200 -100 -150 100 -200 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 RENTAL RATES OCCUPANCY RATES $3.89 $7.61 88.0% 90.0% $8.00 100% 95% $7.00 90% $6.00 85%