CRE market strong in first half, expected to remain steady in final two quarters

Activity flow for commercial real estate deals has been steady throughout 2017 after a fast start in the first quarter, one Alabama CRE veteran said.

“It’s never slowed up the last two years,” Douglas McCullough, vice president brokerage at Huntsville’s NAI Chase Commercial office said of the activity he’s seen across the board. “It just seems to keep building momentum. I don’t have enough time in the day to do what needs to be done.”

McCullough said while activity has been high, the number of deals getting done has lagged.

“The cash flow – the deals coming out of the pipeline – has slowed a little bit, but it always seems to come in bunches,” he said.

McCullough said he expects 2017 to at least equal 2016.

“I see things on the horizon being about like they are right now,” McCullough said. “(I see it as) pretty steady, a lot of business activity going on and a lot of deals going on.”

As technology continues to change the real estate industry, McCullough said the real estate professionals who will benefit from this uptick in 2017 and beyond will have to offer more than their competitors when it comes to service and value.

“Those are the people who seem to continue to win the business in a good and a tight market, even more so now,” McCullough said. “I think that gives, whoever is willing to do that, a significant competitive edge.”

Right now, McCullough said he has seen the biggest uptick in the retail market, particularly in one Huntsville development, MidCity, where he has three unique deals going right now.

“I’m seeing an enormous uptick in retail activity,” he said. “We’re doing three pretty significant deals in Mid\City up in the Madison Square Mall. One of them is going to be a game-changer for North Alabama. We’ve brought High Point Climate in from Chattanooga, and it will have a world class rock climbing facility that will probably be known around the country if not around (the region). It will be a significant addition right beside Topgolf.”

McCullough said NAI is also working on two authentic restaurant concepts that will be new to Alabama.

“We’ve been blessed to have some pretty good retail activity,” McCullough said, noting that he is also doing deals throughout the state and outside of Alabama.

There is one automotive retailer McCullough said is expanding in Montgomery, Birmingham and Huntsville.

“We’re representing some regional retailers,” McCullough said. “We’re putting them down in Montgomery. We have several locations down in Birmingham, and we’re looking for another one in Huntsville, so it’s not just the Huntsville market…I’ve got listings all over the state, and some outside of the state, and I’m seeing that kind of activity there as well.

McCullough said he expects to see more challenges for existing retail, particularly large shopping malls, as e-commerce continues to grow at a fast pace.

“We’ve tremendously overbuilt the malls and the retail spaces to the point to where it’s flooded, and now you bring this e-commerce business to the table and what’s there is half of what’s needed,” he said. “I think you’re going to see a lot of repurposing, like what you see at MidCity, where the whole retail picture is going to change dramatically.”

McCullough said retail is not the only sector seeing reductions in space utilized by companies. He recently relocated an industrial company from a 30,000-square-foot facility because most of the operation is now automated with robots, which has eliminated the need for many of the company’s employees.

“They doing it in half the space,” he said. “Even in the industrial world, the efficiencies and the artificial intelligence (is changing it).

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