Cutbacks at major businesses and stagnant job growth are expected to create more than 1.1 million square feet of empty office space in downtown Birmingham by year’s end.
Birmingham’s Central Business District is the largest office submarket in the metro area, with about 6 million square feet of office space, Al.com reported .
A large part of that space is in the city’s high-rise buildings.
At the end of this year’s third quarter, 12.3 percent of office space in the Central Business District was vacant.
“We are in a reduce, reuse, recycle phase in the office market,” said Emily Byrd, a commercial broker with Corporate Realty Associates.
“Due to the changing landscape of downtown and the evolution of how companies use space, we have a number of buildings that are either in need of updating or not being utilized for their highest and best use,” Byrd said.
Two banks — Regions and Wells Fargo — are reducing their presence in the downtown core, Al.com reported.
About 200,000 square feet of space was vacated by Regions in the Regions-Harbert Plaza. The company moved into renovated offices at Regions headquarters on Fifth Avenue North.
Also, Wells Fargo is cutting about 100,000 square feet of space in downtown next year, brokers said.
Energen will vacate its 130,000-square-foot headquarters in the downtown core after its acquisition by Texas-based Diamondback Energy is finalized later this month.
Downtown Birmingham will likely see more than a 1 million square feet of empty office space because of stagnant job growth, said Brad Jones, senior vice president of Cushman & Wakefield / EGS Commercial Real Estate.
“We keep seeing jobs going to other cities,” he said.
The Birmingham-Hoover metro has only seen 1 percent job growth over the last year, according to the U.S. Bureau of Labor Statistics.
“We would be able to do more deals if we could figure out how to increase the number of jobs in the city,” Jones said.
Also, in general, companies don’t need as much office space as they did a decade ago, Al.com reported.
In the past, companies would lease 350 square feet per employee. Now, due to open-concept offices they need as little as 180 square feet per employee, said William Ledbetter, a broker with Cushman & Wakefield / EGS Commercial Real Estate.
Republished with permission from the Associated Press.