SOUTHEAST SNAPSHOT, FEBRUARY 2010

Birmingam Retail Market

Claude Tindle of Birmingham-based Longleaf Realty Partners thinks the area's retail market is in line with that of similar cities throughout the country. Markets large and small have been hit by the recession, he says, and everybody is trying to make sense of the crisis.

The Birmingham market is experiencing declining rental rates and is suffering from negative absorption, but with no new development on the horizon, things could be worse. "The B and C space, where you have the mom and pops, has suffered the most," Tindle says. These smaller retailers need rent concessions and abatements to stay afloat, and in some cases, retailers have even gone out of business. "On the higher-end side, you've had some of the national retailers pull out, resize, reconfigure, and that's hurt some of the higher-end centers," he says.

The only recent development that has gone on in Birmingham was left over from before the downturn. Bayer Properties has just opened the latest phase of its Summit project at the interchange of Highway 280 and Interstate 459. The phase primarily consists of 75,000 square feet of office space, but it also includes first-floor retail space. Apple Properties finished The Grove, a power center in Hoover, Alabama, during the fourth quarter of last year. Kohl's and Lowe's will open in the power center this year. 

Tindle believes the recession has taught developers and owners to be more careful when pursuing new deals. While Birmingham has never been overbuilt, he says, the industry will think twice before building speculative developments in the future.

"I don’t know that we'll ever forget what happened. I hope we don't; I don't think that's healthy for the market," he says. After thinking about the situation, however, he reconsiders. "History probably is a good indicator that I'm wrong about that. We have 20-20, blindside vision when we look into the past. History repeats itself."

Robust banks will usher in a turn-around in the industry. Healthy financial institutions are needed to provide developers with financing, but banks also help reassure wary consumers. After all, consumers drive the retail industry, and, if there's one thing on the minds of most retailers, it's the health of the consumer.

"A certain amount of tenants are still worried," Tindle says. "Talking to most folks, I think sales probably will be better than they were in ‘08, but still not where they need to be for everybody to feel good about themselves."

— Jon Ross

©2010 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.