Predictions Come True

Michael Calvert, president of Operation New Birmingham (ONB) which promotes revitalization in the City Center, said no one should really be surprised by the popularity of loft condos and apartments. Experts had already predicted Birmingham would follow the trend.

The Urban Land Institute study in 2003, last year’s City Center Master Plan update by Urban Design Associates of Pittsburgh, and the Zimmerman/Volk Associates study done as a part of that plan, all researched the demand for urban living Downtown.

At ONB’s 2003 one-day seminar touting the untapped loft market potential, consultant Laurie Volk predicted that developers could build up to 1,000 housing units in and around Downtown per year for five years to tap into the demand of people wanting to live in the City Center.

ONB set a modest goal of adding 2,500 residential units to the City Center by 2009. Currently, there are 576 existing units; 1,600 more are under construction or firmly committed over the next few years, Calvert says. “Some people thought we were overly ambitious. But it looks like we’re going to meet that goal, if not exceed it.”

Others wonder out loud whether the 1,600 residential units, all hitting the market about the same time, will exceed demand. Calvert says the same thoughts clouded people’s minds years ago, after construction of the first loft developments.

“People asked, ‘How deep is the loft market? Are there that many people wanting to live Downtown?’ There were several hundred units on the market that were very quickly rented or sold, before construction was finished,” he says of the scenario then. “So the market is much deeper than people thought when we started and it still is.”

Leigh Ferguson, director of urban living for Sloss Real Estate Group, says the appetite for Downtown condos is very similar to what happened in Atlanta, Charlotte, Chattanooga, and other cities years ago. Birmingham’s conservative bent curbed the urban living trend here. But now that it has caught on, the kinds of loft developments underway will continue at a steady pace, he predicts.

“Now that the product is being brought on line, the level of demand we’re seeing in the marketplace is, really, what has been predicted for some time by these experts,” Ferguson says. “But it’s exciting when you see it happen.”

New Life for Downtown Landmarks

It’s not that real estate developers didn’t seriously consider renovating old Downtown buildings before.

But unleashed demand has meant scores of people willing to pay well over $150 per square foot for upscale condos barely off the drawing board. This makes it less risky for developers tackling even the biggest, most challenging loft conversions to get bank financing, and turn a nice profit.

Recently announced loft condominium conversions in Birmingham’s three landmarks – the crumbling City Federal, the former Cabana Hotel and the old Pizitz department store buildings – testify to the strength of Birmingham’s urban living trend.

At the end of June, Atlanta developers Synergy Realty Services inked closing papers on the 27-story, 170,000-square-foot City Federal Building. Work on the icon is stirring even skeptical suburbanites to consider that Downtown Birmingham is, in fact, experiencing a rebound.

“The reception to the renovation of this building in Birmingham has been incredible,” says Randy Herron, one of Synergy Realty’s six principals. “I really see it as a big step for Downtown because it’s confirming that Downtown living works. The folks living down there already know that, but for everybody else, it’s a visible symbol that Downtown is back.”

“It’s energizing the City and the movement to be Downtown, the fact that this building will live again in all its glory,” she says.

Built in 1913, the City Federal was once the tallest building in Alabama and the Southeast. It’s sat vacant since the mid ‘90s. In recent years, its terra-cotta facade began crumbling so badly that the City erected a fence around it to protect pedestrians. Earlier this year, the City took owner Sam Barber to court to force repairs on the historic structure.

Herron and his partners, experienced in renovating old historic buildings, reached a deal with Barber to sell it. Though the building is sound, Herron admits City Federal poses serious challenges – repairing the terra-cotta façade, removing asbestos, replacing old windows (hundreds of them), and old mechanical systems.

“I can see why other people have found it difficult to get this deal done. But our guys have approached the major challenges, and found cost efficient ways to handle them to complete the residential build out,” he says confidently of the $20-million-plus redo.

Cabana = Leer Tower

LeerCorp of Modesto, CA, is working to acquire the 20-story, 156,000-square-foot Cabana Hotel, formerly known as the Thomas Jefferson Hotel. It was completed in 1929 and has been vacant since 1983.

LeerCorp plans to purchase the building in August and spend more than $20 million to turn it into 55 condominium lofts. The project will also have a swimming pool and a rooftop garden terrace, and electric cars for residents to lease.

The units’ four basic layouts are named after American presidents – $225,000 for the Washington, $289,000 for the Roosevelt, $299,000 for the Lincoln and $399,000 for the Jefferson, the most popular unit because each has a private elevator. They range from 1,097 to 1,665 square feet.

Instead of one penthouse unit as originally planned, Leer Tower now has four on the top floors (the top one is already reserved). Each floor, about 6,400 square feet, is selling for $850,000, unfinished; owners will have to pay to finish them according to their own tastes.

David Leer, 27, president of LeerCorp says restoring the architectural beauty of historic buildings has become a passion for the family-owned enterprise run with his father, William, primarily because of the economic impact such projects have on local communities.

Though construction and sales will be handled in-house, LeerCorp plans to draw heavily on local sub-contractors. So about 60 cents of every dollar it spends here will flow into the Birmingham economy, Leer says. Plus, property taxes from the Leer Tower condos will provide windfall sums to strained City coffers. And, the company plans to locate an office here.

“When you renovate a historical building, it doesn’t just help your Downtown; it helps the whole economy,” he says.

Leer believes his company’s investment in the Cabana is coming at just the right time to take advantage of the new urban living wave that’s lifting property values and hopes for a revitalized Downtown Birmingham.

“I think this area – with Phoenix Lofts and the Jefferson Lofts across the street, the Pizitz building just down the block now under review, the McWane science center, the City Federal building and the new entrepreneurial center next door to us (in the long-abandoned Sears building) – we’re in a prime location for what we’re trying to do here.”

Herron and Leer hope at some point to attract commercial or retail use, especially white-table cloth restaurants, on the bottom floors of their renovated buildings. They say restaurants will bring more foot traffic to Downtown, especially at night, and add more vibrancy to City living.

Next Page: And the Pizitz, Finally