The Huntsville commercial real estate market was resilient throughout the COVID-19 outbreak of 2020. While all sectors were immediately impacted by the rolling and confusing shutdowns, the market has stabilized and recovered quite well in a short period of time.
Birmingham is fortunate to be home to a high concentration of construction companies, architecture firms and engineering companies that are shaping the look of the nation – and in some cases, the world.
While many of those companies have built giant enterprises and high-growth firms by working on projects abroad and elsewhere in the nation, there is a large concentration of new projects right here in the Magic City.
New developments and massive renovations are in the pipeline, and more announcements are always on the horizon. The city was dotted with cranes and other construction elements throughout the pandemic, indicating the health of the Birmingham construction industry.
To recognize the transformative projects that are changing the face of the Magic City, the Birmingham Business Journal publishes its Building Birmingham Awards. The goal for starting the specal section in 2019 was to highlight not just the projects that are shaping our economy, but the talented companies and people who are making them possible in Birmingham’s construction and design industries.
In this year’s Building Birmingham Awards, you’ll read about 21 projects that were selected for this year’s feature and hear about what nominators think makes the project notable.
Honorees were chosen based on their impact, their degree of difficulty and unique aspects of the projects, among many other factors.
A developer is gearing up to break ground on a longtime hotel project next to the BrickTop’s restaurant.
Aum Enterprises is poised to begin construction on the new Residence Inn by Marriott at 2800 U.S. 280 S. in Homewood with completion expected by the end of the year.
It’s a six story, 120-unit hotel with a pool that replaces the former Residence Inn on Lakeshore Parkway, said Rakesh Patel, president of Aum Enterprises in Birmingham.
“We are very pleased with its location next to Bricktop’s restaurant and at the intersection of Homewood, Mountain Brook and Birmingham,” Patel said.
Bradley & Schmidt Architecture PLLC in Dothan and Gonzalez-Strength & Associates in Birmingham are involved in the project, according to documents.
An investor group has purchased a building in Vestavia Hills just off the heavily traveled Highway 31 corridor.
VOP 100 LLC purchased 100 Vestavia Parkway from F/F2 LLC for $3.1 million, according to a release.
VOP 100 LLC is registered to Thomas N. Carruthers III, and F/F2 LLC is registered to C T Corporation System out of Tennessee.
The 30,000-square-foot building is currently occupied by Carr Allison Oliver & Sisson PC, which signed a lease with the new owners.
Carruthers, who is also with with Red Rock Realty Group, represented the buyers, and Dan Lovell with Graham & Co. represented the sellers.
“We are thrilled to have had the opportunity to purchase this very nice office building, and we look forward to having a long relationship with our tenant, Carr Allison,” Carruthers said. “This is Red Rock’s second investment in Vestavia Office Park, and its fourth investment in 2021.”
A building in the Highpoint Office Center in Vestavia has a new owner.
Mountaintop Holdings sold the Chambers building to affiliates of Engel Realty Co. for $2.7 million, or more than $75 per square foot.
The selling entity is a holding company for Mountaintop Community Church, which is located across Centerview Drive from the property. The entity had acquired the property from Southmark Properties LLC in 2006.
The purchasing entities were Chambers Vestavia LLC and BLE Brighton LLC in the deal, which closed May 14. CommerceOne Bank in Birmingham provided $2.675 million in financing for the deal, according to public records.
Engel Realty represented the purchasing entities, and Matt Gilchrist and Walter Brown of Graham & Co. represented the seller.
Engel Realty is managing and leasing the two-story, multi-tenant building, which is about 34,800 square feet. The firm is planning some cosmetic improvements to the property, including new paint, upgrades to the landscaping and parking lot as well as renovations of the interior.
“We want to continue the momentum that that building has been experiencing,” said Stephen Butler, senior executive vice president at Engel Realty. “It’s got good occupancy and a good tenant mix.”
Built in the 1980s, the Chambers building is one of four in the Highpoint Office Center, which includes the Shelby, Walker and Barbour buildings. Engel Realty leases Shelby and Walker.
Leasing remains strong in Birmingham and several high-profile properties downtown have changed hands, signaling a bullish investor interest in the local office market.
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Despite facing headwinds from high steel prices, a local developer is bullish enough on the strong demand for industrial space to move forward with a speculative project in Birmingham.
Graham & Co. is investing $15 million in the first phase of “Crossroads Commerce Center,” a new industrial development off Daniel Payne Drive in the Hooper City neighborhood near downtown.
The central location is expected to be a big draw for companies looking to have access to the major arteries in the state.
“We are very bullish on the site, which has a signalized access to Daniel Payne Drive with easy access to I-65, I-22, and I-20/59 just south of the site,” said Jack Brown, senior vice president at Graham & Co.
The first phase of the project will include an 186,000-square-foot building with two drive-in doors, 35 dock positions, 15,000-square-foot bays, ESFR sprinklers, a truck court, 46 trailer storage spaces and about 135 auto parking spaces.
“The high bay building will have all the modern features and offer plenty of car and trailer parking,” said Sonny Culp, senior vice president at Graham & Co. “We can lease spaces as small as 45,000 square feet.”
RADERMcCary Construction is the design builder, Designform is the project architect, and SouthState Bank is the construction lender. Located in an Opportunity Zone, the project is also being funded with OZ dollars.
Graham & Co. plans to begin site work in August and, once steel is delivered in December, to start coming out of the ground over the holidays to be shell ready by March 2022.
One of the main sticking points so far has been nailing down the steel needed for the project.
“We think the time is right to deliver some new space to the market. It’s been a little while since some has,” Culp said. “We own our land, we’re permitted, we’re blowin’ and goin’ — we would be starting 60 days sooner but for the steel.”
Graham & Co. acquired the 29-acre site in March, as we reported.
The site will be mass graded during the first phase, making it pad ready for a second phase that is expected to include another 186,000-square-foot building. A potential third phase on an adjoining 5-acre site could see anything from trailer storage use to a new 60,000-square-foot building.
The project is expected to attract one to three tenants that could range from distributors to automotive or light assembly companies.
“Hopefully a new company coming to Birmingham that needs space and is going to be creating some jobs, or we hope that these buildings finally are the springboard that will allow an existing company that’s somewhat landlocked to make the leap into something that’s going to allow them to continue to grow,” said Henry Graham, vice president of development at Graham & Co.
B.L. Harbert International has bought more office space in Mountain Brook.
The large general contractor paid $2.75 million for 500 Office Park Drive, Unit 1, or about $115 per square foot, according to public records. The purchasing entity was 500 Office Park East LLC, and the deal closed June 3.
B.L. Harbert bought the approximately 24,000-square-foot office condominium to support its growth and has no redevelopment plans for the property, according to a company spokesperson.
The building’s second unit, which was not part of the deal, is about 38,000 square feet.
The selling entity, 500 Office Park LLC, is registered to Rob Howland of Capstone Communities. It had acquired 500 Office Park Drive in 2015 for $6 million, according to property records.
Built in the 1970s, the three-story building is 62,534 square feet. Oikon manages the property, and Graham & Co. oversees leasing.
Situated near U.S. 280 between Hollywood Boulevard and Shades Creek Parkway, the property is located in the Midtown submarket, one of Birmingham’s healthiest office submarkets. It is one of a string of prominent office real estate deals for Birmingham, particularly in the downtown area.
An industrial packaging supplier for Mercedes-Benz U.S. International has moved into a larger space in Shelby County.
Kontane Logistics Inc. has opened in a new facility at 500 Alabama 70 in Columbiana after an extensive renovation project led by Graham & Co. The company, which provides wood crates to MBUSI, is taking space in a portion of the former Vulcan Coatings building.
Founded in 1975 in Hickory, North Carolina, Kontane Logistics expanded in North Carolina, South Carolina, Alabama and Texas. The family-owned business provides packaging, crating and logistics services.
Kontane had to expand quickly to accommodate Mercedes, and due to the tight industrial market in metro Birmingham, project leaders were skeptical whether they could pull it off under the given timeframe. They credit several key players in making it happen, including Bob Garunovic, general manager at Kontane; David Mitchell, mayor of Columbiana; Dale Lucas, director of planning and zoning at Columbiana; Philip Crunk, development services at Shelby County; and Jackson Pruett, senior project manager at 58 Inc.
“Columbiana and its spacious industrial park is centrally located to support four world-class auto manufacturers within 40 – 100 miles of our city,” Mitchell said. “To that end, we are pleased to welcome auto supplier, Kontane Logistics, and their employees to our community. We are excited about what they bring to our city, its industrial park, and look forward to a long and prosperous relationship, a first step in helping Columbiana become a hub for auto suppliers in the state of Alabama.”
Kontane had been operating in Calera for several years before the move. Its previous location has been backfilled by a new occupant.
“We worked with Kontane when they originally moved to Shelby Commerce Park five years ago,” said Ogden Deaton, senior vice president at Graham & Co. “When they needed a freestanding warehouse, they wanted to stay in Shelby County due to the workforce, and together we found an available warehouse.”
With overall occupancy down almost 2% last year, Birmingham’s office market fared much better than expected.
That’s according to the latest office market survey by Graham & Co. with input from a handful of other real estate brokerages in town.
Despite the pandemic, rental rates actually rose in every submarket at an overall rate of 0.3%, and landlords reported 100% rent payments, said Dan Lovell, director in Graham & Co.’s office group. Part of that is due to construction costs, but companies are waiting for the dust to settle.
“We’re really still early to figure out the effects of Covid and work from home,” Lovell said.
Lochrane Smith, director of leasing and business development at Sloss Real Estate, said the firm saw strong leasing performance last year with no lag in activity, especially with tech companies looking for unique spaces.
“A lot of tenants valued maximizing space to safely spread out their employees, but they also valued having the opportunity to have a courtyard area and other spaces to work,” Smith said. “If a company can provide an office where their employees want to be then they’ll, more often than not, elect to come to the office.”
Much of that has to do with amenities like restaurants in addition to collaborative space such as conference rooms.
“The function of an office is to bring the team together to collaborate on big projects, and when the team is separate and working from home, it’s less effective than when everyone is together, meeting and on the same page,” Smith said.
Companies can take advantage of the low interest rates and lock in long-term leases or buy real estate, Lovell said. Nevertheless, coronavirus serves as an inflection point with businesses developing a work-from-home strategy. It is premature to put a number on it, but fear of work from home spelling the doom of the office is overblown.
“We’ve had office buildings for a long time in this country before Covid, and we just weren’t that wrong,” Lovell said. “Office buildings aren’t going away.”
A bigger challenge is job creation, but Birmingham has a shot at attracting companies exiting larger states if there is a local connection and efforts to reel them in.
“Somebody’s going to get them, because they are leaving,” Lovell said. “I’d take the base hits. If we get some that have 50 jobs, that would be great.”
A former automotive shop near Pepper Place could soon be redeveloped.
Graham & Co. is working with the owner of the Russell Speed Shop along Third Avenue South to reimagine the property for retail or office use.
John Coleman and Matt Gilchrist of Graham & Co. are working on the project.
Coleman and Gilchrist said they have received a number of inquiries but no leases have been signed yet.
The property comes with 14 parking spaces on site, but public parallel parking is also available on Third Avenue South, which were installed when the street was recently re-paved and re-striped.
The team hopes to begin construction on the core and shell in May.
If the project moves forward, it would be another sign of transformation for the neighborhood.
“Anytime a developer revitalizes and resuscitates a dead property, it brings more life to its surroundings,” Coleman and Gilchrist said.
Located at 230 31st St. S., the property is in the dynamic Lakeview area that has seen major activity with Pepper Place, multifamily construction and new restaurants and bars.
