|
Standing on the ground floor of the newly renovated Pizitz building in Birmingham, Bayer Properties CEO Jeffrey Bayer surveys the result of an immense undertaking. “This was a totally speculative effort, ” he says. “We had a $70 million project with no promise of income. Long-term is why you do it. You have to believe in your own plan.”
Today, a diverse crowd mills about the food hall during the lunch hour. Some may work downtown, some may have walked over from the nearby loft district and some may have come down from the apartments on the floors above.
Built in 1923, the Pizitz building was originally headquarters of the Pizitz regional department store chain launched by Louis Pizitz. The eight-floor structure on the corner of 2nd Avenue and 19th Street was a symbol of Birmingham’s then-booming economy and served as an anchor for downtown commerce. However, the Pizitz chain was sold in the mid-1980s to the McRae’s chain, and the building was shuttered in 1988, gradually succumbing to the elements inside and out for the next three decades.
Real estate firm Bayer Properties purchased the building in 2000, with the goal of restoring the structure and bringing vital new business downtown. “You needed to build a critical mass for retail in the city, ” says Bayer. “We had to figure out how we could put together enough focused mass to have a serious impact. Pizitz would be the center, the bull’s eye.”
Bayer recalls that from the beginning, the project relied on confidence in the city’s ability to support the intended mix of living, dining and retail, though there were no hard tenant commitments yet. “We had a quarter of a billion dollars of construction going on at the same time with no assurance it would all work, ” says Bayer. “It only became obvious just a few years ago that things were beginning to percolate downtown. We had a long-term goal and a plan to get there. Sometimes you have to break ground and get started to show people that you’re serious.”
The 251, 210-square-foot property now includes 143 apartments, retail and office space, public and tenant parking deck and an instantly popular public food hall. Shops include Alabama print design team Yellowhammer Creative and eyewear retailer Warby Parker. The lower level is also home to two theaters and the office of Birmingham’s Sidewalk Film Festival. “The theaters here will further this neighborhood’s status as Birmingham’s theater district, ” says Bayer.
In February, the food hall opened as the revitalized building’s debut, including 13 food stalls and two restaurants, with a local focus and diverse assortment of vendors. The redesigned ground floor was originally intended to house a single local restaurant, but when the idea fell through, the space opened up to host a broader variety.
“Food halls became a buzzword after we had already started work on the building, ” says Bayer. “The entire atmosphere was different then, and we found ourselves moving in the right direction.”
On the mezzanine overlooking the food hall, small businesses have found a home in a co-working space called the Forge. Leasing for the apartments began last November. While response has been strong and occupancy is now high, the long wait between construction and leasing required faith in the market months in the future. “You can’t lease your space too far ahead, ” says Bayer. “So when we started work, we didn’t have anything leased. During the project, a lot of apartments were coming up around town. That showed that people were moving to Birmingham, but that’s new competition at the same time. We didn’t know if the demand would continue when we were ready. At the time, we didn’t know if we’d be able to lease anything like we did.”
|
While Birmingham has responded to the revitalization with enthusiasm, it was hard to imagine how successful the project would be at the outset, given the immense overhaul the property would require. “Our biggest challenge was taking on the building itself, which had been vacant for 30 years, ” he says. “There was so much decay to overcome. The elements had broken in and done considerable damage in all that time.”
Construction involved major structural changes, including the installation of an atrium in the center of the building, restoration of classic features like columns and hardwoods, and the modernization of spaces like the food hall.
The finances were arranged through a combination of long-term debt and owner’s equity, banking on the project to yield multiple revenue sources. “Pizitz must be supported by more than any single component, ” says Bayer. “It needs more than just the residents or just the food. You have to plan for how each of these will operate individually.”
The feasibility of the project depended heavily upon historic tax credits, a state program to help offset the major expenses of historic revitalization. “If not for the city’s support and the tax credits we received, Pizitz would have never happened, ” he says. “The city has been terrific. Mayor (William) Bell and the council deserve all the credit in the world.”
Bayer adds that for such revitalizations projects to continue, the state must preserve its historic tax credits. “Taking them away would only slow the redevelopment of Alabama’s downtowns, ” he says. “You have to be subsidized for a project like this. Tearing down a building is one thing. Bringing one back is different. It involves so much work, so many resources. The Pizitz building would still be vacant and decaying if not for those tax credits.”
While the building’s vitality has come roaring back, Bayer admits that he didn’t begin to breathe easy until fairly recently. “I really didn’t know how well it would work until this January, ” he says. “Now it’s up to us to manage it well and continue to add value.”
As they have demonstrated with other Birmingham properties like The Summit, Bayer will actively manage Pizitz, analyzing what works and what can be improved. “We’ve learned that you can either rest on your laurels or you can reinvest in your assets to remain relevant. If you don’t try to make what you have better, you may lose out. The only way to keep people coming is to invest capital and make it better.”
Earlier this year, Bayer Properties saw another long-term project come to fruition. Drawing inspiration from their Summit property in Birmingham and the emerging mixed-use design, Bayer completed work on the Summit at Fritz Farm in Lexington, Kentucky.
The Summit at Fritz Farm combines 300, 000 square feet of restaurant and shopping space, and will feature living above the businesses. The project will include 300 apartments, plus a boutique hotel. “We’re working with the new wave of development in the U.S., ” says Bayer. “It’s become a catchphrase, but people really do want places where they can live, work and play.”
Bayer Properties partnered with three other Alabama-based construction companies to complete the project: multifamily contractor Capstone Building Corp., multifamily developer Dobbins Group and general contractor Brasfield & Gorrie.
Fritz Farm held a soft opening in April. A number of shops and restaurants opened to begin drawing attention to the location, while more tenants will open for business throughout the year. “We’re starting to see consumer interest, ” says Bayer. “We went into an untapped market and brought something new to it.”
The mixed-use model has become Bayer Properties’ specialty, and they’ve developed a strategy for combining and sustaining each component. “When you have a vertical mixed-use project like this, you must carefully divide the uses and account for their particular needs, ” says Bayer. “You must be respectful of the residents, of course, and ensure that all their affairs are handled separately from the retail and other uses. When you see common ground, look for how you can incorporate them all effectively.”
Bayer sees these projects as investments in their surrounding communities. The restoration of the historic Pizitz building reinforces the city’s identity while strengthening downtown’s commercial viability. Fritz Farm provides a rich, self-contained center for living and more.
“Our mission statement is to create real estate environments which improve the quality of life in the communities we serve, ” he says. “If we’re going to do something, it must have a major impact for the community.”
Tom Little and Cary Norton are freelance contributors to Business Alabama. Both are based in Birmingham.
Text By TOM LITTLE // Photos by CARY NORTON
