Hand Arendall to anchor $30 million Merchants Plaza in Mobile
A firm specializing in redevelopment of historic structures has bought five adjacent downtown Mobile buildings, including the former Merchants National Bank building. The properties will become the multi-use Merchants Plaza development. (Mike Kittrell/Alabama NewsCenter)
Barely one month after developers unveiled ambitious renovation plans for one of downtown Mobile’s most historic structures, the ink is dry on Hand Arendall LLC’s lease to anchor a component of the $30 million rehabilitation project.
Memphis-based Heritage Land & Development Inc. announced Aug. 31 the law firm will relocate its current RSA Tower offices to three floors of the eight-story office building next to the former Merchants National Bank building. All told, the development firm specializing in restoring historic structures across the Southeast purchased five adjacent structures earlier in the summer that combine to offer 225,000 square feet for reimagining.
“Hand Arendall recently relocated its Birmingham offices to the Historic Federal Reserve redevelopment in downtown Birmingham, so we felt like Merchants Plaza in Mobile could offer a similar opportunity that complements the firm’s strategic plan,” said Preston Bolt, managing lawyer of Hand Arendall’s Mobile office. “We are excited to be a part of this downtown revitalization project, and proud to renew our commitment to downtown Mobile.”
Developers envision Merchants Plaza becoming a mixed-use housing, retail, restaurant and office space in Mobile’s urban core.
“It’s a landmark piece of property in the best location in downtown Mobile, and you’ve got a private-money developer coming in here to spend upwards of $30 million. So yeah, there’s a lot of confidence in this project, and we haven’t even begun marketing it yet,” said Allan Cameron, a principal with NAI-Mobile and the project’s local leasing agent working alongside Birmingham’s Harbert Realty Services.
The project includes renovation of the former Merchants National Bank building and four nearby structures comprising roughly one acre bordered by St. Francis, St. Michael, St. Joseph and Royal streets. Hand Arendall will occupy three floors of the 80,000-square-foot office building at St. Francis and Royal Streets.
Heritage Land & Development Principal John Glassell said Hand Arendall’s signed lease signals demand is strong for the historic undertaking.
“This project is a perfect fit for Hand Arendall’s needs. We are looking forward to having the firm in Merchants Plaza, and they are the first of many great tenants headed our way,” Glassell said.
Architectural significance
Developers refer to the 18-story Merchants National Bank Building, constructed in 1929, as “the tower.” It is expected to house 84 upscale apartments, including several two-story penthouse units with “spectacular views” of downtown and the Mobile River.
Plans call for developing 80,000 square feet of adjacent Class A office space and 26,000 square feet of ground-level opportunities for retail, restaurant and commercial endeavors spread across the five structures.
Stephen McNair of McNair Historic Preservation Inc. called the Merchants National Bank building one of the “most architecturally significant structures in Alabama” because it is recognized as one of the Gulf Coast’s earliest skyscrapers, though the nearby van Antwerp building holds the title of oldest.
“We are honored to be included on the team that will restore and adaptively reuse this landmark and contribute to the revitalization of downtown Mobile,” said McNair, whose Mobile-based national historic preservation consulting firm will help the developer navigate the federal and state historic tax credit programs.
McNair said his firm is developing applications to submit to the Alabama Historical Commission for the federal historic tax credit program, with submissions for state credits expected by the close of 2017.
“I think it’s always a challenge when you have a project of this size, but we will be working alongside all of the development partners to find the balance between maintaining the character of the property while also transforming it for contemporary uses. It’s a complicated line to follow, but our experience with these projects is extensive, and we have a clear understanding of what is expected when it comes to acceptable modifications and alterations of the interior and exterior,” McNair said.
The most challenging spaces, he said, will be ground-level spaces earmarked for nonresidential development because, to meet historical requirements, the designs must maintain their open floor plans.
“Given those parameters, we believe a pharmacy or grocery store or restaurants would be especially good fits for those spaces,” McNair said.
Cameron called the northwest corner of the property “ideal” for an upscale restaurant because it could open onto a planned courtyard, creating a “magnificent venue.”
“Other than that, the office space will obviously be professional in nature, but at such an early point in this process we’re not targeting any specific food group of clientele or tenant for the available retail and commercial spaces on the ground level,” he said.
Rehabilitation projects gaining steam
In addition to Mobile’s positive business climate, McNair points to the recent renewal of the Alabama Historic Rehabilitation Tax Credit program for enabling developers to even consider pursuing Merchants Plaza.
“Mobile has become especially attractive to outside developers and investors for the past three years, primarily because they see downtown Mobile as an untapped market that has the infrastructure to be rehabilitated but needed the stimulus of investors and also tax credits to make the projects feasible,” he said, calling Merchants Plaza the “largest rehabilitation project in the history of downtown Mobile.”
“We’re honored to be included on the development team and look forward to making this a premier project to serve as a catalyst to continue the growth and momentum of downtown Mobile,” he said.
Less than one week ago, ground was broken blocks away for the $51 million Meridian at the Port. The five-story, 267-unit waterfront development – set for completion in 2019 – will boast upscale studio, one- and two-bedroom apartments and is being developed by Leaf River Development Group and Bristol Development Group, based in Mississippi and Tennessee, respectively.
Meanwhile, a long-abandoned nearby 1940s-era structure built as a hotel for seamen is being eyed for 70 apartment units and possible razing and redevelopment of an adjacent site for commercial purposes.
Timing will work in Merchants Plaza’s favor, Cameron said, considering it could come online a full six months ahead of Meridian at the Port, but he does not anticipate a housing glut to develop in the city center because of the new offerings.
“We’re looking at a total of about 400 new units between the three projects, but I definitely think the market is there, especially based on our experience in other cities where as many as 2,000 units have been brought online in the past two years. I don’t see a glut developing,” he said.
