Marcus & Millichap

Birmingham Retail Market Report

Second Quarter 2018

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Tenants Filling Existing Space As Retail Deliveries Slow

Retailers benefit from favorable demographic trends and minimal construction. Employers throughout the metro created 6,900 positions during the past four quarters, the largest year-over-year total since 2013. The added jobs kept the unemployment rate below 4 percent for the eighth consecutive month and contributed to drawing 4,400 residents to the region over the past 12 months. With more households working, the median income advanced 1.1 percent and produced a 3.4 percent rise in retail sales during the same period.

Construction pipeline thins, contracting vacancy and pushing rent growth. During the past four quarters, developers completed 320,000 square feet of retail space, less than half of the prior annual period. Deliveries are expected to fall even further this year as builders have less than 100,000 square feet underway. Vacancy sitting at the 10-year low of 3.6 percent in the first quarter, however, could prompt some planned projects forward as the year progresses. Tight vacancy pushed the average asking rent up 9.6 percent over the past four quarters, matching the highest rate since 2007. These conditions bode well for retail operators in 2018.

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