The University of South Alabama conducts an annual Commercial Real Estate Summit. The conference was held last month at the Riverview Plaza in downtown Mobile, Alabama and was superbly organized and presented. The expert speakers at the conference served as a reality check on the current state of the real estate market.
Local Mobile area commercial real estate executive Gavin Bender made a presentation on conditions in the office building and office space leasing market. Bender divided the City of Mobile into three districts: Downtown, Midtown and West Mobile.
According to him, downtown Mobile is in the best shape. One of the reasons for this, Bender says, is that Baldwin County residents prefer downtown for the shorter commute. Another reason he cited is the newer Class A office space available only in the downtown area.
There are currently three Class A office buildings in downtown Mobile, according to Bender. The rental rate per square foot and percent occupancy for 2010 were:
RSA Tower $20.00 70%
Riverview Office Plaza $18.50 100%
One St. Louis $16.00 95%
Bender did not list any Class B office buildings in the downtown area, but the Class C office buildings were shown as the Commerce, Regions, Wachovia and BankTrust Buildings. The BankTrust Building is the former AmSouth tower and is currently undergoing extensive renovations by its new owner, the Retirement Systems of Alabama. It will probably be upgraded to Class A or B upon completion. The rental rate per square foot of all the Class C buildings was quoted at $14 per square foot.
Don Kelly of the Mitchell Company made the presentation on the retail segment of real estate development and leasing. The outlook for this market segment appears less optimistic. According to Kelly, shopping centers ended 2010 nationally with a near record 11percent vacancy rate. Actually, by casual windshield observation, many shopping centers in Mobile and Baldwin Counties seem to be experiencing a much higher vacancy rate.
The total retail vacancy rate for Mobile, Alabama (including shopping centers and all other retail classifications) was 6.5 percent last year. This compares to New Orleans with a 5.3 vacancy rate, Birmingham with a 6.2 rate and Baton Rouge with an 8.8 percent rate.
On the residential side of the local real estate market, Dr. Don Epley of the University of South Alabama reported that in February the median sale price of homes in Mobile County rose 13 percent to $112,000. The number of sales in February rose by 17 percent from January.
The highest volume market was under $200,000 with 87 percent of the 237 total sales. Twenty-one properties sold in the $200,000-$299,999 price range, 6 in the $300,000-$499,999 range, and only three above one-half million.
Epley reported that the average number of months-to-sell the existing inventory of properties fell from 17 in January to 14 in February, a positive sign.
In Baldwin County as a whole, the median sales price increased 13 percent to $176,850. Breaking it down further, median sale prices in North Baldwin rose 30 percent, Eastern Shore rose 10 percent, and Gulf Beach increased12 percent. The South decreased 40 percent to $97,000, and Central decreased 52 percent to $74,950.
Sales for the whole county rose from 152 in January to 292 units in February, or and impressive 55 percent. Average days on the market for the whole county decreased from 211 in January to 198 in February. The Eastern Shore time frame increased by 3 to 189 days.