USA – ALABAMA Trends and Developments Contributed by: Adam J. Sigman, Crystal H. Walls, Nathan Stotser, Katie Sinclair and Courtney Bradshaw, Dentons
Data Centres The impact of advancing AI can be felt in the real estate world, too, with technology companies turning their attention to developing data cen - tres at a rapid pace in order to keep up with the speed of AI innovation. These operation facili - ties, known as global data centres, have become the hallmark intersection between the worlds of technology and real estate, with North American data centre inventory growing by 24.4% year- over-year in Q1 of 2024. Many southern states, including Alabama, have risen to the forefront as targeted, desirable real estate for developments to help meet the growing worldwide power and storage demands. The authors are seeing an uptick in developers assembling sites and work - ing with Alabama Power Company for data cen - tre developments throughout the state. Based on the current pacing of AI adoptions and devel - opment, the data centre market has become and will continue to be a growing and integral part of the real estate market in the coming years. Industrial Total e-commerce sales in the USA increased 8.1% from 2023, and e-commerce sales accounted for 16.1% of total sales in 2024. The authors believe that Alabama experienced similar trends. Consequently, the acceleration in online sales has boosted the demand for industrial logistics spaces. Amazon accounted for nearly 40.4% of all US e-commerce in 2024. With the opening of its most recent distribution centre in Dothan, Alabama in 2024, the online giant directly employs roughly 7,500 people within the state. Demand for industrial spaces held relatively steady in 2024. A notable trend during this time has been an uptick in legal work related to the rezoning and development of new warehouse and industrial projects, with sale-leasebacks
being used as a financing vehicle. With the inflat - ed cost of building supplies and labour short - ages, construction continued, but at a slower
pace than usual. Traditional Retail
Alabama’s real GDP retail trade grew by 3.4% and 6.0% during the second and third quarters of 2024, which grossed USD254.4 billion for the state. The primary thriving end users are grocery stores, home improvement stores and dollar stores, as well as outparcel-like fast-casual and fast-food restaurants. While inflation rates have hit consumers hard, there is still strong evidence of successful growth in the retail space. There have been strong demands in the area from budget retailers who can more easily slide into suburban spaces. In the larger cities in Alabama, adaptive reuse projects have reimagined spaces into office and mixed-use spaces. Furthermore, a segment of traditional retail development has transformed into more experience-oriented entertainment for activities such as Top Golf, arcades and breweries/distilleries (with food and games) venues featuring putt-putt courses (eg, the new PopStroke location in Tuscaloosa, Ala - bama), and new eateries that include family and group activities for all ages to enjoy. Birmingham boasts a vibrant and diverse fine dining restaurant scene, offering a rich blend of innovative cuisine and Southern classics. These restaurant spaces have reinvented buildings all over the city, from warehouses to office build - ings, houses and gas stations. Even with smaller retailers facing economic uncertainty, there has been continued success in the food industry in the metropolitan areas of Birmingham and Huntsville, proving the resilient nature of con - sumers today.
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