SOUTHEAST SNAPSHOT, FEBRUARY 2006

Birmingham Multifamily Market

Development is practically non-existent in the Birmingham multifamily market. There are only about 1,500 units under construction or planned in the area. Of those new multifamily projects, most of the development is taking place in the Downtown, Midtown and Highland Park areas of Birmingham.

Condominium construction or conversions are consuming every new development in the Downtown, Midtown and Highland Park submarkets. Two condominium conversions are The Capri, developed by Euro American Advisors, and The City Federal Building. The Bristol at UAB (University of Alabama-Birmingham) and The Standard are two other multifamily projects in Birmingham. However, there is no overwhelming demand for new rental multifamily construction and there are barriers to new development in most of the prominent locations in Jefferson County.

Vacancy rates are low in Birmingham with estimated rental rates as low as 50 cents per square foot to more than $1 per square foot. Engel Realty Company owns and/or manages more than 4,000 units in metropolitan Birmingham and the average occupancy rate for those units is 95 percent.

Shelby County has been experiencing recent growth and it is expected to continue. New multifamily developments will begin to appear along the Highway 280 corridor in the Chelsea area as well as the Helena and Pelham areas. These areas are attracting growth and areas like Hoover, which has been saturated by growth, are becoming difficult to develop new multifamily rental housing.

The most popular residential areas in Birmingham have enormous barriers to entry and the city does not have a large supply of rental housing either. Those two factors translate to a high occupancy rate and overall success for the Birmingham multifamily market.

— Bill Butler is exeutive vice president with Birmingham, Alabama-based Engel Realty Company.

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