The trend for multifamily development in Mobile is steady-to-trending downward, according to Charles "Chuck" Stefan, senior executive vice president of The Mitchell Company's apartment development division. "We currently have population growth of slightly less than 1 percent," he explains. "We have lost a lot of apartment dwellers to single-family homes during periods of low interest rates, and I would expect this trend to accelerate with the recent reduction in interest rates."

All of the development activity in the Mobile market is directed at affluent renters-by-choice. There have been a couple of smaller, 50-unit tax-credit properties developed, but this segment of the market accounts for only 50 units per year.

The two major development areas in Mobile are West Mobile and the Eastern Shore. West Mobile encompasses the area north and south of Airport Boulevard and west of Interstate 65. This area is located near both malls and the power centers at each major north-south intersection with Airport Boulevard. Birmingham, Ala.-based Arlington Properties, a new developer in Mobile, is currently building its second apartment complex in the city. Arlington Park will feature 250 one-, two-, and three-bedroom apartments and will be ready for occupancy in June. The units are large and will be aimed at the top level of the marketplace, according to Stefan. Arlington Park's West Mobile location is excellent and it should be well received.

The second major development area is on the Eastern Shore of Mobile Bay. A good school system and suburban atmosphere primarily drive development in this area, says Stefan. The most significant development on the Eastern Shore is Audubon Park, a 264-unit property that was completed in early 2000. It is still in the rent-up stage and is oriented to renters-by-choice.

The Springhill Area of Mobile is the most desirable part of the city from a residential standpoint. A lot of people want to live in Springhill because it's close to the malls and the County Club of Mobile. The Mitchell Company is currently working on a new apartment development in the Springhill area.

Mobile's multifamily market will grow at a very slow pace, says Stefan. "Growth rates will probably average 1 percent," he says. "This is caused by two factors: the slow population growth and low interest rates that are making single-family housing more affordable."

Rent levels in Mobile are approximately $100 per unit per month less than they are in Pensacola, Fla., and Biloxi, Miss. Each of these markets is within a 60-mile driving distance from Mobile, and construction costs in both markets are approximately the same, Stefan notes. This accounts for the scarcity of new construction in the Mobile market.

Charles Stefan is senior executive vice president of The Mitchell Company.


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