SOUTHEAST SNAPSHOT, OCTOBER 2011

Huntsville Industrial Market

The city of Huntsville, Alabama, is no stranger to threats of economic disaster, so overcoming it is a matter of pulling together a team of commercial brokers and economic development professionals who will see office and industrial buildings as half-full, rather than half-empty. In 2005, the Base Realignment and Closure (BRAC) initiative set Huntsville on a fast track to economic growth and commercial prosperity. Three hard years of unprecedented national financial crashes played havoc with the market, but what remains is a handful of proverbial optimists.

Jeff Wilke, vice president of Graham & Company, says the absorption rate in the industrial and commercial sector seems to have slowed and stabilized in 2011. From 2007 to 2009, the absorption rate fell as companies moved out and no new companies moved in. “The market is showing signs of coming back as early as this year,” says Wilke. “Property absorption rates are a good indicator of the market. We remain upbeat.”

While everyone admits Cummings Research Park (CRP) was essentially untouched by the national fiasco, it continues to prosper as companies like Dynetics and Raytheon expand and build. Donna Blue, vice president of the Weichert Community Affiliates division of WRTG, says that to savvy business people from big cities, renting and buying office space at CRP is like attending a blue light special.

“They are used to paying $25 to $30 per square foot, at a minimum,” she says. ”You can get office space in Research Park right now for $14 to $16 per square foot, and in older buildings, as low as $12 to $14 per square foot.”

The newer area of Huntsville surrounding CRP off University Drive (Highway 72) is lined with new commercial real estate ventures, like the $1 billion Redstone Gateway Project, unveiled in March 2010, which will turn cotton fields into 4 million square feet of office space and create 20,000 jobs.

Ken Smith, director of research and information services at the Huntsville/Madison Chamber of Commerce, points out the new Madison Hospital, a new retail shopping center with a Earth Fare Healthy Market, and the new Kroger Superstore on University Drive at Jeff Road. “We see more than recovery. These are signs of growth,” says Smith. “Jones Valley is about to get a new Kohl’s and downtown is about to explode with urban development.”

Another project under construction is Constellation, McLain Commercial Real Estate’s (Coldwell Banker) downtown mixed-use development at Clinton Avenue and Memorial Parkway. It includes two Marriott hotel properties, a 100,000-square-foot of office building, two parking decks, 80 multifamily units and more than 63,000 square feet of retail space. “Constellation has been a decade in the making,” says Scott McLain, managing broker for McLain Commercial Real Estate. “We are in ongoing discussions and negotiations with potential tenants, and striking deals to have every parcel of the development finalized in 2011.”

Donna Lamb of Lamb Commercial Services says, “There are almost 60 new jobs created and 15 new businesses that have opened in historic downtown Huntsville since June 2010. They bring a wide variety of dining, shopping, and entertainment. All of them locally owned means tax dollars stay in Madison County.”

“Huntsville has always been an inherently open and positive market,” says Jim Andrews, publisher of the Commercial Property Directory. “It is part of the city’s personality to always be optimistic.”

The market statistics Andrews shared were equivalent to other major Alabama markets like Mobile, Montgomery and Birmingham. Even if Huntsville’s vacancy rate is slightly higher in the industrial sector than experts would like, Huntsville leaders will say our city has higher growth potential than competitive cities and an excess of space is the result of preparedness, not loss of business.

— Neil Victor, CCIM, senior advisor of Sperry Van Ness/Avat Realty.

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