A new white house with dark trim stands where police claim the last “open-air” drug market in Mobile operated for more than three decades. At a ceremony Monday, April 30, the city officially turned around what had been a former drug hub into a new single-family residence.
“This is a victory,” Mayor Sandy Stimpson said. “We can claim victory on this one lot, but we have to make sure this permeates. It’s a great, great day in the city of Mobile.”
At one point neighbors of the property on the corner of State and Kennedy streets were scared to leave their homes, or even drive past for fear of violence, Stimpson said. Public Safety Director James Barber said before the previous house was demolished, officers with the Mobile Police Department monitored roughly 650 drug transactions made from the address within a two-month period.
“It stood as a symbol for contempt of the law,” Barber said. “… The full-circle has now been completed.”
The home will be given to Family Promise of Coastal Alabama for use by homeless families coming out of the organization’s emergency shelter, Executive Director Diane J. McCaskey said.
“It’s an opportunity to work with families for a longer period of time,” she said. “It’s an opportunity to work on problems that take longer.”
The house at 1076 State St. is the second in the Family Promise portfolio. The first is a duplex on Delaware Street built in 2015.
Over the last few years the city has turned 50 blighted properties into new single-family homes. The vast majority of those have used funds from the United States Department of Housing and Urban Development and must go to low- to moderate-income families, Senior Director of Neighborhood Development Jamey Roberts said.
Despite those efforts, a shortage of affordable housing persists. At the same time, a number of new and proposed market-rate and high-end developments on the horizon in downtown and midtown are doing little to alleviate the issue.
With more than 500 units — both market-rate and high-end — leasing or planned for the near future in downtown and midtown, oversaturation of the market is a concern for some developers.
Cory Thomas, co-owner of Thomas Properties in Fairhope, said he has some concerns of oversaturation of the market and is racing to break ground on his mixed-use condominium development called The Brickwell before other similar downtown developments come online.
“We’re hoping to beat some of those,” he said.
The Brickwell, planned for the corner of Washington Street and Springhill Avenue, is designed as a mixed-use development with retail and office space on the ground floor and six or seven two-story condos on top, Thomas said. Among the retail fixtures, he said, would be a coffee shop.
“Right now, we’re finalizing the costs of development,” Thomas said. “Shortly thereafter we’ll begin pre-sales.”
Thomas could not disclose the price of the condos, as the price depends on the number built, and that has yet to be determined.
He said he’s confident in the market right now because of the excitement generated from the downtown area.
“Everybody has seen a tremendous influx of money pouring into downtown,” Thomas said. “There are a lot of people who feel really good about it.”
The Brickwell should be under construction later this year, Thomas hopes, with construction finishing up through the middle of next year.
Taylor Atchison of Atchison Properties, a developer of several properties in Mobile, said he believes the demand is high for upscale apartment living. He credits strong leadership for an increase in demand.
“I think downtown taking a step forward in amenities has really opened residents’ eyes up,” he said. “When you rent in downtown or midtown, the amenities have to be included.”
A big amenity when living downtown is walkability and bikeability, Atchison said.
Atchison is part of a team developing the old Red Cross building at Broad and Dauphin streets into a mixed-use project. The development will include retail and office space below with a few apartments above.
“The need is there,” he said. “We have a lot of jobs coming into the area all the time.”
Despite his confidence in the market, Atchison admitted renters could be pulled from other areas, including other coastal cities.
In addition to the new development, Atchison was part of a team that redeveloped older, vacant properties into the Marine Street Lofts, Broad Street Lofts and Old Shell Lofts. Developers will be adding a second phase to the latter, which will include 48 new units, Atchison said.
Broad Street Lofts, which is the product of a redevelopment of the old Russell School building, is completely leased, he said.
Still, the biggest development planned in downtown in decades is the 265-unit Meridian at the Port, a joint venture between Leaf River Group and Bristol Development, out of Tennessee.
Stewart Speed, president of the Mississippi-based Leaf River Group, said the first units could come online on Water Street as early as May 2019. He said there are a couple of reasons why Mobile is seeing a luxury apartment boom right now.
“There’s a lot of good momentum from a job growth standpoint and a downtown business activity standpoint and that’s tied to good leadership in Mobile,” Speed said. “It’s coupled with a lack of product. There’s no Class A multifamily product in Mobile.”
The concept of high-end, luxury apartments has been successful in other spots regionally, Speed said, and there’s an opportunity here. Rent at Meridian will run between $1,100 and $2,000 per month, Speed said.
“The timing seems right for this product in Mobile,” Speed said. “I hope we were right about that. I think we were.”
Meridian, like almost all the newly planned developments in downtown, will be mixed use. A 3,000-square-foot outparcel building will include retail shops, Speed said. The development will also include a dog park. He said developers haven’t focused on the retail side yet.
“It’s needed,” Speed said. “Downtown Mobile has been underserved. It’s playing catch-up right now.”
Another player in the high-end, mixed-use development of downtown is real estate firm NAI Mobile and its work on Merchants Plaza. Josh Hall, director of property management for NAI Mobile, said the old Merchants Bank location on the northeast corner of Bienville Square would consist of multiple buildings for office space, with the existing tower converted into 84 apartments. Hall said the apartments would lease for $1,500 per month or more depending on floor plan. A penthouse on the 18th floor of the tower would run its occupant $2,500 per month, he said.
NAI Mobile is also behind a development called the Temple Lodge on St. Francis Street. The development is fully leased.
Another mixed-used development is planned at 450 St. Louis St., according to Stephen McNair, owner of McNair Historical Preservation. The space will consist of market-rate apartments as well as commercial office space and retail, he said.
Much of the enthusiasm from developers can be attributed to the state’s renewal of historic tax credits, which allow builders to more easily renovate old buildings, like many downtown, into new developments. McNair called the renewal and the use of federal credits a “catalyst” for development downtown.
In addition to the credits, McNair said enthusiasm comes from newfound investor confidence.
“A mix of both local and out-of-state investors indicates a lot of confidence in the future of downtown expansion,” he said. “The Water Street and Broad Street redevelopment projects and the possibility of the [Mobile Regional] airport relocating to Brookley all has a positive impact on downtown.”
The city also recently made a deal to sell a building colloquially known as “City Hall north” to a developer to convert into a mixed-use development along Water Street. The Tower on Ryan Park is also planned for a renovation.
Need for housing
A residential market assessment commissioned by the Downtown Mobile Alliance shows more residential properties are needed downtown for the foreseeable future, spokeswoman Carol Hunter said.
The draft study performed by Zimmerman/Volk Associates, out of New Jersey, indicated more than 250 new rental and for-sale housing units can be accommodated per year over the next five years. The majority of those, between 155 and 186, would be lofts and other styles of apartments. The study also showed a need for 18 to 28 large condominiums or for-sale apartments per year over the same period.
The study also supported adding 21 to 34 new row houses and 11 to 18 new cottage-style homes or bungalows per year during that period.
The Zimmerman/Volk study also showed the amount in rent the area could sustain. For microloft and studio apartments from 400 to 1,000 square feet, the rent suggestion is $625 to $1,500 per month. For one- and two-bedroom apartments from 550 to 1,100 square feet, the study suggested rents from $925 to $1,800 per month.
The planned apartment units in downtown are not scheduled to come online at the same time, Hunter said. At the rate they’re planned, the units should fill a growing need outlined in the study. She said the organization believes demand for apartments will continue, as the study bears out. Hunter said demand is coming from two different groups.
“We’re seeing young people who want to live downtown and empty nesters … who want to give up their yards,” she said.
There is also the influence from Europe, which emphasizes urban living, Hunter said. To further accentuate the demand, she said, excluding The Tower on Ryan Park — which is about to undergo its own redevelopment — rental space downtown is “essentially 100 percent” occupied.
Affordable housing shortage
Despite the positive vibes of his Monday morning news conference, Stimpson highlighted the need to do more to help the housing situation for low- to moderate-income earners in the city. Specifically, he mentioned the approach of turning over blighted property.
“It’s got to be scalable,” Stimpson said. “One-offs are not going to do it.”
He suggested the city look at additional ordinances to aid it in acquiring clear titles to abandoned property more quickly and lobbying on the state level for similar fixes.
“Part of the blight program we’ve been working on is acquiring enough property to let a developer work on several lots at the same time,” Stimpson said.
Housing First Executive Director Eric Jefferson, who admitted he and Stimpson weren’t the “best of friends” when it came to this issue, agreed. He said affordable housing must come to the city more quickly.
For those on a fixed income or low- to moderate-income earners, Jefferson said affordable rent needs to be closer to $500 per month, not $1,200.
“If a child gets sick, or you miss work and get behind the eight ball, $400 to $500 per month, you might be able to survive that,” he said. “You’re not going to survive at $1,200 for rent and utilities.”
McCaskey agreed there is a shortage of affordable housing in Mobile and announcements about more stringent work requirements or limits on what families can receive from HUD aren’t helping.
“This is a huge problem,” she said.
The Mobile Housing Board (MHB) has a waiting list of thousands of applicants as it prepares for major redevelopments of some of its oldest properties. Replacement housing is under construction, but it may be years before it becomes available.
Michael E. Pierce, executive director of the MLK Avenue Redevelopment Corp., who served as developer on the State Street house, agreed there is an affordable housing shortage because of changes made by HUD and MHB.
“With public housing shrinking … anything we can do in concert with the city to put back affordable housing is helpful,” he said. “Public housing has taken a different approach; it’s more scattershot now. There’s less density, but it’s more spread out.”
Atchison said he believes the market will even out as demand continues, with more affordable rents filling in gaps when more high-end renters leave for downtown.
Neither Jefferson nor McCaskey see much benefit to low- to moderate-income families in large, high-end apartment complexes.
“The city seems to see a benefit in huge apartment buildings,” McCaskey said. “There is no direct benefit to families in need.”