Cummings Park growth expanding
Friday, May 30, 2008
By MARIAN ACCARDI
Times Business Writer marian.accardi@htimes.com Huntsville's office market increased by nearly 2 million square feet from 2006 to 2007, and the major force behind that expansion is Cummings Research Park.
The park is set for more growth as defense contractor Northrop Grumman plans to break ground in August on its second building in the park. It would be similar in size to the building that opened in February 2007: four stories and 100,000 square feet. The primary tenant will be the company's Kinetic Energy Interceptors office, which recently moved here from northern Virginia.
"The 13.5 percent growth in the amount of square footage on the market is pretty impressive," said Kyle Collins, senior vice president of Colonial Properties Trust. Cummings, the nation's second-largest research park, is "the juggernaut area. It's where the activity is."
Of the more than 15 million square feet in the area's three office submarkets in 2007, 11.1 million square feet was in the park.
Collins spoke Thursday at the Huntsville-Madison County Commercial Market Symposium at The Ledges country club in southeast Huntsville. About 180 bankers, developers and commercial real estate professionals attended the event, sponsored by the Alabama CCIM (Certified Commercial Investment Member) Chapter, Alabama Institute of Real Estate Management and North Alabama Commercial Realtors.
Among recent developments in the Cummings submarket are the openings of the 260,000-square-foot HudsonAlpha Institute for Biotechnology, the 152,000-square-foot Verizon Wireless call center and the 58,000-square-foot Digium headquarters.
In addition, Lockheed Martin last year completed a 150,000-square-foot expansion in the park.
The latest Northrop project is essentially phase two of the Los Angeles-based company's plans to develop a four-building campus at the park that would consolidate most of its local operations. Dan Montgomery, Northrop's vice president and corporate lead executive in Huntsville, expects construction to start by year's end and be completed by late 2009. He estimates construction costs at $17 million to $20 million.
After the 2005 Base Realignment and Closure Commission decision to move several military commands to Redstone Arsenal, "a lot of companies started to expand," said Rick Davis, director of Cummings for the Huntsville-Madison County Chamber of Commerce and a speaker at Thursday's symposium.
In a four-and-a-half to five-year period stretching to late this year and early 2009, Davis said 31 projects, encompassing almost 4 million square feet, are built, under construction or planned in the research park. That includes Bridge Street Town Centre, the retail, hotel, entertainment and office development that's opening in phases.
The project has a 138,000-square-foot office building under construction.
Bridge Street, Davis said, is a "huge asset," bringing people to the park who otherwise wouldn't have a reason to go there.
In the downtown submarket, Collins said, Breland Cos. opened the 96,000-square-foot Commerce Center - the former SCI headquarters - at Clinton Avenue and South Memorial Parkway after a $12 million renovation. On the other side of the interchange, Scott McLain expects to start construction by August on two hotels for his Constellation project. The development is also slated to include offices, condominiums, restaurants and maybe apartments.
The overall occupancy rate for office space in the Huntsville market is 96 percent, while the occupancy rate for buildings with multiple tenants is 94 percent.
Jeff Wilke, vice president of Graham & Co.'s Huntsville office, said the vacancy rate for industrial space in the area is 5 percent. "I think this market is very healthy," he said.
The industrial vacancy rate nationally is about 8 percent.
More than 300,000 square feet of speculative - no signed tenants - industrial development is expected to start this year, Wilke said. Those include Triad Properties' second phase of Tradeport and Graham's second phase of Airport Distribution Center, both at Jetplex Industrial Park; and Graham's 102 Quality Circle, a mix of industrial and office space in Thornton Research Park.
