The vacancy rate in Huntsville's office and industrial markets last year was healthy, with office vacancies remaining below 8 percent for the third year in a row. The industrial market was even tighter, with the vacancy rate at just over 5 percent.
And a new survey of Huntsville's commercial real estate conditions shows that as office and industrial space fills up, new projects in both markets continue to come online.
"The Huntsville office market remained at a healthy level in 2007 with an overall vacancy rate of 7.36 percent, which is well below the national average of 12.5 percent," said Bart Smith, managing broker with Graham & Co. in Huntsville. The Birmingham-based company publishes a report each year tracking the local office, industrial and retail markets.
"This low vacancy rate is especially impressive when you factor in the 1 million square feet-plus of office space that was constructed and occupied" in Cummings Research Park, Smith said.
Such vacancy rates signal a strong economy and smart development, said Brian Hilson, president and CEO of the Huntsville/Madison County Chamber of Commerce.
"We haven't gotten ahead of ourselves" and overbuilt, Hilson said.
When companies such as Northrop Grumman build a new facility or campus to consolidate operations that were spread across several locations, "it reintroduces leasable office space in the market," Hilson said. That, in turn, "gives us product for other companies."
Although the office vacancy rate isn't the lowest that Kyle Collins has seen in his 21 years in the business, "it's pretty close," he said.
"The market here is very strong," said Collins, senior vice president of Colonial Properties Trust in Huntsville, whose properties here include nine office buildings. "Occupancy rates are in the low to mid-90s, which is excellent."
He attributes the strong office market to the healthy economy here, with a balance of private- and public-sector work, "the good quality of life and strong intellectual capital."
Another factor in the area's low office vacancy rate, particularly at the research park, Smith said, are zoning regulations for Cummings Research Park West that restrict developers from building speculative office space.
Among projects mentioned in the Graham study that should ease tightness in the market include the 133,000-square-foot Offices at Bridge Street off Old Madison Pike, which is expected to be completed later this year; and a development, including an office park, planned by Montgomery-based Jim Wilson & Associates on 422 acres of Redstone Arsenal property near Interstate 565 and Rideout Road.
The report noted that the scarcity of excess land in Huntsville's central business district helped spur the redevelopment of several buildings, including the former SCI headquarters - renovated by Breland Cos. and reopened as Commerce Center for several tenants.
Huntsville's industrial vacancy rate for 2007 was 5.12 percent, well below the U.S. average of 10.2 percent, Smith said.
New construction of industrial space last year was less than 1 million square feet, according to Graham, most of which was absorbed.
"There is over 500,000 square feet of industrial space planned for 2008," Smith noted, adding that the low vacancy rate usually means that buildings will lease quickly.
Much of that new development is at the Jetplex Industrial Park at Huntsville International Airport.
Industrial Properties of the South is developing two, 42,000-square-foot buildings there. That company - owned by Charlene B. Graham and her husband, Dr. Jerry M. Graham - operates more than 1.3 million square feet of industrial and office space in all.
"We're now running 95 percent occupied," Charlene Graham said. The company's occupancy rates haven't always been that strong, though, she said. "We're seeing a positive impact from BRAC."
The Graham report also showed that the retail market increased last year by more than 600,000 square feet - dominated by the opening of Bridge Street Town Centre in Cummings Research Park.
Three shopping centers of more than 270,000 square feet total are slated to open this year: Village Shops of Madison on County Line Road and Harvest Square on Alabama 53, both anchored by Publix grocery stores; and Prominence Shops on U.S. 72 West, anchored by TJ Maxx.
However, the tight commercial market does have a downside, Smith said.
The low vacancy rate in the office market - along with increasing construction costs - drive rental rates higher, with some lease rates now topping $20 per square foot.
"The low vacancy rate makes it a landlord's market," he said, "and sometimes makes it difficult for tenants to find space."
By MARIAN ACCARDI
Times Business Writer
marian.accardi@htimes.com
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This is a great place if you're 40+ with a wife/kids and want a mcmansion in some subdivision...but if you're 20 something and single, this place blows harder than Jenna Jameson sucking a dick. 
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