USA – ALABAMA Trends and Developments Contributed by: Adam J. Sigman, Crystal H. Walls, Nathan Stotser, Katie Sinclair and Courtney Dow, Dentons
was 29% higher than the fourth quarter of 2024. This increase in demand can be largely attributed to manu - facturers seeking facilities and developments that are able to support high power requirements and auto - mation, which are necessary in life-science-related healthcare spaces and typical in e-commerce produc - tion and logistical spaces. E-commerce also saw an increase of 6.8% from 2024, adding to the demand of industrial spaces, which have become essential to keep pace with the ever-growing demand for online shopping and shipping. Data Centres: The Promise of AI and its Impact on Real Estate There are few left who are not aware of the grow - ing market and demand for AI, and the real estate market is no stranger to what is required to match that demand. Nearly 50% of businesses around the globe have begun integrating AI into their operations, and with this follows considerable popularity for data centre developments. Data centres are the physical buildings that contain the technology, machines and infrastructure necessary to process AI programs such as ChatGPT, Claude and many more. It is predicted that nearly seven trillion dollars will be spent over the next five years to build and upgrade them. By the end of 2025, there were over 10,500 data cen - tres globally (located in 174 countries) with nearly 40% located in the United States. With this demand for data centres comes the reality of what it takes to cre - ate and manage them. On average, data centres cover 100,000 square feet, with larger centres using up to five million gallons of water per day for cooling pur - poses. AI program leaders have reported increases in gas emissions over the last five years due to the inte - gration of AI into their products. In September 2025, a Washington Post report calculated that a single 100- word email generated by AI tools such as ChatGPT requires the equivalent of one bottle of water to cool the servers on which it runs. To address this, many larger competitors in the AI market are committed to reducing and recycling their use of resources leading into 2026. Yet, alongside these challenges lies significant oppor - tunity, as the industry begins to navigate the design and construction of such data centres and to also
integrate AI into its standard processes. Those who invest now into the construction of these centres could see massive growth and profit in the coming years. US states with multiple data centres gener - ated more than USD30 billion in additional economic output annually. In Alabama, the state government has continued to create new tax incentives, including property tax abatements for ten years, for projects that invest up to USD200 million within that timeframe. Several projects were proposed during 2025, includ - ing a hyperscale centre in Bessemer, Alabama which would be 4.5 million square feet, and several other large-scale projects around the state are expected to begin in 2026. The New World of Traditional Retail The retail market remained resilient in 2025 even as an increasing percentage of the consumer market was driven by higher-income households. In the second quarter of 2025, the top 10% of earners accounted for nearly 50% of spending. At the same time, real disposable income growth continued to slow sub - stantially for those in the remaining 90% of the popu - lation as savings were depleted and debt servicing costs increased. According to Wakefield’s Marketbeat report for 2025, the retail market’s improvements over the course of the year were largely driven by active backfilling in the secondary market such as discount retailers, grocery store chains, sporting goods stores and the like, making up nearly 50% of all store open - ings (by square footage). While the first three quar - ters were marked by uncertainty and challenges, and despite consumer instability and tariff chaos, the national retail vacancy rate ended the year at 5.7%, an improvement on the previous year. With such a small percentage of the population driv - ing a large percentage of consumerism, retail owners and developers have searched for new and unique forms of retail. As a result, formerly underutilised properties, such as abandoned industrial facilities and vacant office buildings, have been transformed into innovative, mixed-use consumer spaces fea - turing restaurants, retail shopping destinations and small business concepts. In Alabama, the retail mar - ket has endured on a steady diet of new, interesting small businesses and exciting new restaurants filling once-empty storefronts and business parks. Whether
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