The Downtown Mobile Alliance held a tour last week that showcased, among other spaces, a massive, 120-year-old, 270,000-square-foot, five-building, mixed-use property sitting on roughly an acre of high-dollar real estate in downtown Mobile.
It is called Merchants Plaza, and when it was originally completed as Merchants National Bank in 1929 it was the tallest tower in Mobile. It held that title until 1965, when the First National Bank Building was built.
Dripping with history, the property may very well be another game-changer in terms of downtown Mobile’s residential renaissance. It was originally acquired by Memphis, Tennessee-based Heritage Land & Development in 2017 for $4 million.
Vetted with intent by the developer, the site is situated a handful of blocks away from the Greer’s Fresh mixed-use site, which is wrapping up work on the St. Louis Street corridor — an acclaimed “tipping point” project that broke ground to much fanfare almost a year ago to the day downtown.
“Old college friends”
Per Josh Hall, commercial broker with NAI Mobile (hired by Heritage), the lot holds five buildings with an attached outdoor courtyard fronting Royal Street. Entrances are found at 104 St. Francis Street and 56 St. Joseph Street. St. Michael Street completes the grid.
Per Hall, the five buildings break down accordingly: an 18-story, 75,000-square-foot residential tower; an eight-story, 100,000-square-foot commercial building currently 80 percent occupied; a five-story, 50,000-square-foot storage unit; a three-story, 30,000-square-foot property; and a one-story, 15,000-square-foot lobby intertwined between the retail, commercial and residential sections.
“Old college friends, Allan Cameron with NAI Mobile and Dean Nix with Harbert Realty Services out of Birmingham, initially connected for the sale of this property,” Hall said.
Nix represented Heritage and NAI Mobile provided background information on the property that was purchased from Sooner Properties out of Dallas.
Largest historic restoration project to date
The site is full of firsts.
It is first in terms of the largest single chunk of capital invested by Heritage, a firm that has invested significant dollars in other mixed-use spaces in Columbia, Miss., Chattanooga, Tenn., Memphis, Tenn., and Tuscaloosa.
To date, the developer has forked out around $40 million to renovate the property prior to making it move-in ready for residents sometime this summer. The 18-story residential tower section has been repurposed into holding 73 high-end apartment units.
This is their first foray into Lower Alabama, investing in a space initially known as a four-story, 1890s-era savings and loan building. When bought, the site was virtually empty, a monolith struggling with occupancy issues prevalent among many older properties found downtown.
Now, upon completion, the repurposed, high-end residential space will run the spectrum from 440-square-foot studios to 765-square-foot, one/one tenements, and topping out with two/two units with a max area of 1,244 square feet. Monthly rent for the units will range from $1,000 to $3,600 a month, based on size, location and amenities.
Birmingham-based Arlington Properties manages the residential side of the development and, according to assistant manager Samantha Bedsole, occupancy demand is high.
Merchants Plaza is also a first in terms of local dollars applied toward state and federal historical tax credits, according to Stephen McNair, Ph.D., owner of McNair Historic Preservation.
“The Merchants National Bank project represents the largest historic restoration project to date in downtown Mobile that has utilized state and federal historic tax credit incentives,” McNair said.
“If not for the historic tax credits, this would have never moved forward. Projects like these are why the Alabama historic tax credit program was created. Aside from the creation of much-needed housing in downtown Mobile, the project has also created jobs, created tax revenue and restored a locally iconic architectural structure.”
“There was no work around”
Josh Dindo, vice president of project management at White-Spunner Construction (general contractor in the project), agrees with that sentiment.
“There will be over 36 different subcontractors and suppliers that will have worked on this project during buildout,” Dindo said. “These are good paying positions that included asbestos removal, concrete masonry, steel fabrication, steel erection, carpentry, plumbing, painting and finishing work, among other related trades.”
He went on to say that when work at the site is completed, estimated to be sometime this summer, over 500 jobs will have been created over the course of the project.
One of the bigger challenges in modernizing the 120-year-old property was installing a modern stairwell to meet 21st century safety codes.
“We had to demolish the floor out all the way up 19 floors to meet code just for the stair area, there was no work around,” McNair said. “In order for the structure to remain in compliance for historic tax credits and other incentives, many of the original or remaining architectural features must be preserved.
“The concept of historic preservation is to preserve the character defining features of the property while adapting the use and following modern building codes.”
Anchoring ground zero of the residential tower will be a new, 3,100-square-foot restaurant spun off from The Cheese Cottage, itself considered an anchor property, situated in front of Old Majestic Brewery on the west end of St. Louis Street.
“My lease was coming due at The Cheese Cottage and the initial discussions were not going anywhere, so we thought we were going to have to move,” co-owner Kristi Barber said.
“I started looking at another possible location and Josh Hall, with NAI Mobile contacted me. We had several discussions about what a relationship would look like. In the meantime, the existing developer at The Cheese Cottage came to meet our terms. We then made the decision to open a second space and it was perfect.
“There will be over 50 seats inside and 40 seats outside. This is in stark contrast to The Cheese Cottage. The Cheese Merchant will have a private banquet room that can either do our cheese and wine tasting classes or rent out for groups of 30 or less.”
Some 2,000 square feet of space will be used for indoor seating, with the remaining space utilized as kitchen space. An outdoor patio covers an additional 1,000 square feet and will have an outdoor fireplace.
“We will share employees initially with The Cheese Cottage, but I eventually see hiring maybe 30 more people, mostly part time. Hopefully we will be ready by late summer 2020,” Barber said.
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