IRR-Birmingham Mid-Year Viewpoint 2015 Local Market Report - Multifamily
The multifamily market in Birmingham continues to be healthy and market participants are still bullish about this trend continuing over the foreseeable future. Low Class A vacancy rates and steadily rising rental rates are spawning new construction, particularly in the downtown area. There has also been significant compression in capitalization rates over the past year for both Class A and B product, as outside investors have looked to markets like Birmingham, which offer higher returns than in “primary” markets where capitalization rates have been driven down to extremely low levels.
The compression in capitalization rates, declines in vacancy rates, and healthy rental rate increases have helped to fuel the development pipeline. The highly successful development of Railroad Park in 2010, coupled with the opening of Regions Field baseball stadium in 2013 have breathed new life into downtown, sparking the development of several new restaurants, music venues, multifamily developments, and the renovation/rehabilitation of older office buildings in the downtown area that were previously considered to be functionally obsolete.
The redevelopment of the downtown area is being well received by young professionals and has sparked several new developments that are either currently underway or expected to break ground very soon. There are at least seven projects containing nearly 2,000 units slated for completion over the next 12-18 months in downtown Birmingham: 129-unit L&N Parkside (4th Avenue S and 17th Street); 103-unit Iron City Lofts (4th Avenue S and 28th Street); 145-unit Pizitz Building redevelopment (1821 2nd Avenue N); 236-unit Venue at the Ballpark (3rd Avenue S and 16th Street); 228-unit Liv at Parkside (1st Avenue S and 17th Street); 300-unit upscale 15-story building at 2173 Highland Avenue; and the 28-unit Parisian development, which is slated for the former Booker T. Washington Insurance Building at 1728 3rd Avenue North. Overall, the apartment market in Birmingham is clearly in the expansion phase of the market cycle, and this trend is expected to continue. That being said, many market participants have noted that all of the proposed projects are all “high end” properties, which will test the depth of the Birmingham apartment market, particularly in the downtown area.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.