The Birmingham industrial market is poised for an increase in absorption as the apex of higher interest rates seem to be settling down, not to mention the post-election certainty that now favors business expansion. Corporate America is waking up and the clouds are clearing.
For the past 24 months, the competitive set of investor-controlled warehouse space has been sitting on about 2 million square feet of inventory. About 550,000 square feet of that is still unleased speculative space in three different projects delivered at the back-end of the post-COVID development wave that did see about 700,000 square feet of absorption of new spec space before the music metaphorically stopped.
Then came the 2023/2024 wave of the “new spec space,” a byproduct of the mentioned interest rates and COVID over-correction. Several second-generation spaces are now being marketed as companies vacated or downsized for various reasons. For example, discount retailer Dollar General is vacating an entire 307,000-square-foot warehouse.
Broader, there have been two major announcements in Central Alabama for the closure of distribution centers, both as a result of retailers’ bankruptcies. JoAnn Fabric’s 700,000-square-foot distribution facility in Opelika at I-85 is now on the market as is the 1.2 million-square-foot former Big Lots distribution center in Montgomery.
The two most recent tenants to take down some of this new spec space includes East Penn Manufacturing taking 40,000 square feet in a Scannell Properties-developed project and Conklin Metal Industries leasing 52,000 square feet in a locally developed project.
The most notable lease thus far in 2025 is credited to IES Infrastructure taking down 225,000 square feet of Class A, second-generation space in the Southern submarket. This was followed by Pradco Brands’ fourth-quarter expansion of 52,000 square feet in an adjacent building.
The most noteworthy industrial investment currently underway is by Coca-Cola Bottling Company United, which is building a 100,000-square-foot corporate headquarters and 300,000-square-foot distribution center on the former 100-acre Stockham Valve site across from the Birmingham-Shuttlesworth International Airport. This is a transformative project for the area, representing a published capital investment of $330 million.
At present, there are no build-to-suits underway in the metro area, although there are a few developer-controlled sites that are capable.
Despite the absorption headwinds, a Texas development group is under construction on a 275,000-square-foot spec warehouse on the west side of town in the Jeff Met Industrial Park. This project is set to deliver in the fall.
— By Sonny Culp, SIOR, senior vice president of Graham & Co. This article was originally published in the March 2025 issue of Southeast Real Estate Business.