Office Market

According to the 2007 Annual Market Report by Eason, Graham, and Sandner, Birmingham's office market had an active year in 2006 despite significant mergers and consolidations. While the acquisition of SouthTrust by Wachovia contributed to the current softness of the Central Business District, the suburban markets continue to experience high occupancy rates, particularly in Class A office space. The CBD continued to remain soft in 2006 with no significant new leasing. Absorption was essentially flat with 3,872 square feet of positive absorption while occupancy remained the same at 84.1%. The Midtown submarket continued to experience strong occupancy rates, remaining at 94.1%. While the numbers appeared relatively flat in 2006, there was actually a great deal of activity during the year with some large vacancies being absorbed. Demand is high for Class A office space in the Midtown market, with quoted rental rates of new construction reaching as high as $28 per square foot.

The 280/Southern market continues to show strength as one of the region’s high-growth markets, with residential developments and retail centers continuing to be planned for the area. Demand for space remains strong with occupancy at 92.6%. The Hoover/Riverchase submarket went through a sharp increase in availability in 2006, due chiefly to a public utility vacating a large Class A building in the market. Over the long term, this region's continued residential and retail growth should translate into ongoing office growth. The Vulcan/Oxmoor submarket continued to fill its role as that of a business park and light industrial market, providing service and support for the rest of the city, dominated by class B office product. While the market showed an actual drop in total occupancy, rental rates picked up, especially in the business park sector.