2022 Industrial CRE Trends in Birmingham, AL
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Research the commercial real estate world long enough, and you’re bound to find yourself aligning with one asset type over another. Perhaps you’re a multifamily person because people are sliding around to new places due to the freedom of remote work and the Great Resignation.
That’s all well and good, but there will come a point where you may get tired of being in the same asset class with all of your properties. Why not explore something new, like industrial commercial property?
Birmingham is a local market that has long gotten attention due to the number of aerospace and defense companies in the area, but that isn’t the only economy powering this city of 200,000 people.
Shipping and logistics are growing at a rapid rate, and warehouses in Birmingham, AL is a necessary part of that growth.
Big Leases Signal Opportunity in Birmingham for Logistics
Everyone is getting in on the logistics game, not just the usual suspects like Amazon, UPS, and FedEx. Indeed, Kroger announced that they would pick up a lease for space in Birmingham.
They will lease 50,000 square feet of space designed to interface directly with their hub in Forest Park, GA.
With supply chain issues only continuing to grow, it makes sense that grocery chains like Kroger are trying to make sure that they smooth out issues of getting groceries from warehouse to store as quickly as possible.
Are Grocery Store Shortages Back?
The entire nation is dealing with grocery store shortages, where customers cannot get all of their ongoing favorites. But if the grocery stores are having these problems, other participants in the supply chain are also affected.
Quick service restaurants like Sonic are still alerting customers to this, apologizing in advance for having to pull back on old favorites as some items just aren’t in great supply anymore.
With respect to grocery stores, retailers are working on juggling the twin dragons of supply chain shortages with rising inflation issues.
Consumers are looking to eat at home instead of going out to save money, and this greater demand is sending folks to the store, only to find empty shelves.
Kroger’s Mission Isn’t New
By focusing on leasing warehouse space in Birmingham, Kroger gets to handle a short-term issue while managing capital expenses.
In this case, leasing commercial warehouse space makes a lot more sense than trying to either build from the ground up or buy a building outright. Of course, an acquisition could be a strategy later down the line.
Other retailers will undoubtedly build upon this, taking advantage of Birmingham’s relative access to multiple cities.
Amazon Settling Into Birmingham?
It’s hard to talk about warehouses in Birmingham, AL without talking about Amazon. Indeed, the 800-pound e-commerce behemoth is one of the newer players in the local market, having just come to the state in 2020.
The company announced in November of last year that they would open a delivery station in Birmingham. This comes right on the heels of a huge 1 million square-foot fulfillment center in Huntsville, as well as a 650,000 square feet inbound receiving center in Montgomery.
Catching the Warehouse Wave
Not all warehouses are created equal: when it comes to selecting the right space, it’s critical to think more about the inventory stored vs. the space itself. Will your inventory require a climate-controlled space?
There are plenty of considerations to make when it comes to warehouses, including the following:
- The equipment inside the warehouse has to be large enough to conduct business, without endangering workers. Mapping out exactly the way the production floor will look is critical.
- The loading dock is an often-overlooked portion of the warehouse space, but it’s critical to receiving goods without damage.
- The parking lot has to be able to accommodate not only the trucks that will bring in supplies, but the other people that will be in and out of the space. Vendors, customers, and workers all have to be able to come and go easily.
- The right warehouse space may need renovations in order to be a comfortable and productive space. Do you have enough funds to cover those needs?
The best way to leverage warehouse space is often as part of a joint venture with another company. This ensures that the space is used to the fullest, and the ability to spread costs across multiple partners also holds great appeal.
E-Commerce and Warehouses Are Here to Stay
The e-commerce revolution is here to stay, despite people beginning to return to in-person shopping in the post-pandemic era.
New concerns about pandemic variants are sparking new highs with e-commerce shopping, which in turn is causing an increased demand for warehouse space.
The idea of “last mile” logistics means that there are a lot of discussions around not just e-commerce, but the physical realities of moving that much physical inventory.
Storing, distributing, and shipping items becomes challenging as the volume only continues to climb.
Warehouses and Data Storage
Of course, logistics and shipping aren’t the only use cases for the warehouse format. Warehouses can easily be adapted to store data, especially for long-term storage.
Some climate control may be necessary for sensitive technical hardware, but multiple companies are realizing that warehouses for hardware handling isn’t a bad idea.
According to Tech Jury, 306.4 billion emails are sent every single day. That’s a lot of data but remember: that’s only email.
Add in the other pieces of data that we handle every day, like social media posts, pictures, videos, and even blog posts like this one, and you have the recipe for a perfect storm’s worth of data, every single day.
Warehouses have to archive this data in a way that makes it possible to retrieve the information. Financial institutions have their own data retention policies, and other industries also have strict regulations on how long to keep data.
Warehouses in Birmingham, AL: Versatile and Future-Forward
No one knows when the supply chain issues will be resolved, nor does anyone fully know if e-commerce demand will decrease.
So the prudent path forward is to look at warehouses in Birmingham as a hedge against getting left behind in the data revolution, the e-commerce wave, or the great supply chain crunch.
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