Customer Closes on Commercial Property in Birmingham, Alabama

Birmingham, Alabama has been witnessing a resurgence in the last decade across multiple industries including food and beverage, hospitality, and entertainment thanks to the redevelopment of several regions throughout the metro area. Knowing just how well one could prosper in the heart of Birmingham, our borrowers set out to purchase a building downtown next to a thriving nightlife scene for the purpose of reopening the pre-existing restaurant along with plans for upgrades that would appeal to the already established customer base. 

Our borrowers closed on the purchase of the 795 square foot commercial property in Birmingham, Alabama in November of 2023 with a requested loan amount of $650,000.00. The LTV with the deal was 61%. In addition to the purchase of the current restaurant located at the property, loan proceeds will also be used to fund renovations such as cosmetic upgrades and a new HVAC system. In order to get this deal locked in and fully fund the improvements, we needed to get creative and was able to have additional liens placed on two other buildings owned by one of the guarantors - both located in the Birmingham area. 

"Working with the borrowers, Justin and Eric, was a pleasure. Seeing firsthand the passion they have for this project and the city of Birmingham was an inspiration," says David Runge, Business Development Manager for Commercial Capital BIDCO. Jeff Luker, Commercial Capital BIDCO VP and COO, echoed similar sentiments stating, "Seeing the revitalization of key cities across the country is part of the 'why' for what we do. We love being at the core of these investors' successes and seeing their goals align." 


Why Invest in Commercial Properties in 2022

Commercial Real Estate has shown significant growth in 2021 over what will forever be known as a year of uncertainty in 2020. What was once considered a shuttering market just over a year ago, multi-family residential is full steam ahead while industrial and office space properties are also ticking upwards. With so many changes over the last 18 months, you may be asking yourself, “Why invest in a commercial property?” Our question for you is, “WHY NOT?”

 

According to the "May 2021 RCA CPPI: U.S." summary report, U.S. commercial real estate prices rose at a 1.3% annual rate from April 2020 to 2021. Driving that increase were apartments (up 7.6% year over year) and industrial properties (up 9.4%), the retail sector (up 1.3%), and office buildings (up 3%). – Millionacres.com

 

Commercial and Office Spaces:

From the rise of unique office spaces, the opening of satellite offices in suburbia as well as the reopening of corporate headquarters, offices are seeing a resurgence and where they’re popping up is a surprise to many.

 

With many companies now embracing a strong sense of employee culture that includes comfortable yet trendy surroundings, loft offices are some of the more popular choices across several industries – turning what were once retail-only spaces into multi-use spaces. Now these property types are an appealing investment choice for many who are looking for a diverse portfolio with more limited means.

 

Suburban office space and smaller square feet options for satellite offices are also excellent investment opportunities for those looking to invest in a property outside of a metro locale. This also allows the property owner to work with an experienced tenant who has other offices established in other locations. These general use spaces are also easily flipped allowing a new tenant to take over quickly and easily.

 

While not increasing as quickly or as steadily as residential, office space will continue to tick upward as employers finalize their reopening plans and prepare for most employees to transition back into offices full time over the next year.

 

Retail Brick-and-Mortar:

Retail will continue to evolve and find its pace over the next 12 months. One of the most hard-hit markets due to the pandemic, retail owners saw a surge in online sales, however, an increase in sales also occurred via curbside orders. This particular piece to the sales pie increased alongside a retail company’s increase in direct social media posts – allowing buyers to “shop a store’s social media,” purchase their products locally while also being able to receive their products same-day.

 

With this, we will see locally owned retail opting to keep their brick-and-mortar store fronts, but possibly look to increase their product storage and reconfigure their backstock needs as curbside orders continue and online orders increase.

 

“Same Day Pick-Up!” “Curbside!” These are phrases that have been promoted to buyers since the start of the pandemic – even across larger brands and corporations – allowing buyers to enjoy a slightly altered shopping experience while also receiving goods same-day as opposed to shipping and possible delays.

 

Strip malls and larger retail developments have also adjusted their selling strategy by implementing these additional forms for buyers to receive their purchases – not just locally owned mom and pop stores. While not an ideal situation in an uncertain world, these adjustments helped to keep the doors open for retail – small and large – assuring investors that these particular sectors of commercial real estate were still very active and growing.

 

Multi-Family Residential:

The start of the pandemic saw college students, new graduates, young families and more moving back home with their parents or to other shared living situations with friends and family. The uncertainty of the economy produced a boom of residential real estate listings, however with states now opening back up, markets are seeing a resurgence of individuals and families needing temporary and/or more budget-savvy living options such as apartment and condo rentals. Multi-family commercial real estate has witnessed the greatest increase of growth and will continue to do so as more states, universities and places of employment begin to open back up to pre-pandemic standards.

 

What to Do Now

Always weigh the pros and cons to any investment situation as well as play out each scenario – especially if you are a first time commercial real estate investor – however, striking while the iron is hot will be key to maximizing your investment and cash flow early on. With unique opportunities on the rise across all branches of commercial real estate, investors will be able to build a path that suits their goals. Lending experts – such as our team at Commercial Capital BIDCO – can assist you with the funding you need that the banks simply cannot do. We are proud of our in-house credit team as well as our in-house credit committee that both allow us to process loans quickly and easily. What are you waiting for? We’re ready to talk investment goals when you are!