Case Study

Sturdy Tower, Surrounding Buildings Making More History

6 min read

The Merchants National Bank building in Mobile, AL, has experienced many obstacles since its opening in 1929. For example, the 1929 market crash occurred within weeks of opening, it is currently relaunching through the extensive disruption of a pandemic and has weathered dozens of hurricanes in its nearly 100 years of existence. The $45 million rehab is trying to ensure this historic building and the buildings that surround it can endure for another century.

According to the developer, Will Yandell, co-founder of Heritage Land & Development, LLC, in Memphis, TN, approximately $12 million in State and Federal Historic Tax Credits (HTC) are going toward the Merchants Plaza rehab. The complicated development is anchored by the 18-story Merchants Bank Building and four adjacent buildings (a sixth has been demolished).

In addition to the historic credits ($5 million state and $7.5 million federal), Yandell said the project was funded by equity investors and bank loans. It also received City of Mobile TIF (Tax Increment Financing) incentives, which was used to clean and renovate the exterior facades and sidewalks.

“It really sparkles now, the way we’ve got it cleaned up,” says Yandell. “The City of Mobile was very helpful on this project. It was a joy to work alongside with them and the Downtown Mobile Alliance.”

As for the balance of the financing, “The rest of the capital stack was filled with equity investors and bank loans,” he says.

Yandell says, “Heritage has been involved in developing seven projects like this around the Southeast.”

Market Rate/Luxury Units
The one-acre site, bounded by St. Francis, St. Michael, St. Joseph and Royal streets, started construction in 2018 and is set for completion by the end of next year. The five-year phased HTC project currently has residential and commercial spaces in use. The main bank building features 79 market-rate/luxury apartments renting in the $825 to $3,450 range, and the remaining buildings will be mixed-use residential, retail, restaurants and office space.

According to Yandell, “The luxury apartments are finished, with tenant move-ins imminent. The eight-floor ’annex’ building to the east of the tower offers office space on floors three through eight. The annex is approximately 70 percent leased up with the exception of the first and second floors. We will have retail on the first floor and apartments on the second floor.”

Buildings 2, 3 and 4 are all part of the same structure and meld together.

Building 5 will have two luxury apartments with their own private elevator, and another two- or three-bedroom apartment, plus amenity space.

The pandemic has complicated the build, he says. “Hopefully we’ve got that behind us. It’s been a tough one, but it will be really nice once the entire project is completed.”

The residential property is being managed by Arlington Properties out of  Birmingham, AL. According to Arlington, the total project has 84,000 square feet of adjacent Class A office space and 26,000 square feet of ground-level opportunities for retail, restaurant and commercial space across the five structures. NAI, Mobile is responsible for leasing and management of the commercial space. Construction is being performed by White-Spunner Construction and Lanier Construction, both of Mobile, AL.

Mixed-Use for Tower
“The Tower will have ground floor retail spaces, a leasing office and residential units on floors two to 18, including three multi-level penthouses and on-site clubhouse and a fitness center” says the firm.

Merchants National Bank put a lot of effort into its original buildings, according to the developer. “They had an architect on their staff,” Yandell says.

While the project keeps some of the historic features, others will be distinctly modern, like card key entry and the ability to turn lights on or off by telephone. The security and technology is all up to date.

Stephen McNair of McNair Historic Preservation served as the historic consultant. McNair said Merchants Plaza has been “one of the most challenging projects of my career. “Rehabilitating and adaptively re-using multiple buildings that were constructed over a period of phases can be complicated. Balancing the retention of historic character while also meeting modern codes is always the most difficult path, while also making the spaces attractive for tenants.”

While the building was already on the National Register of Historic Places, McNair had work to do with the National Park Service. “We still had to receive NPS approvals for the rehabilitation design, various code upgrades and transition of commercial spaces into residential.”

McNair and Phillip DeKeyser, senior project manager for White-Spunner Construction, recently gave a presentation on the history of Merchants Plaza and construction details of the rehab for community group Restore Mobile.

McNair described a grand and ornate building combining several styles of architecture that was the tallest building on the Gulf Coast when it was completed in 1929, a year after construction started, and is still the sixth-tallest building in Mobile today. The “annex” building was built in 1941, he says.

Old-Time Construction
“You would not build an 18-floor construction like this anymore,” DeKeyser notes, saying he had to make 25-by-ten-foot holes in each floor of the building for a staircase.

“It’s definitely a type of construction no longer used today.”

Since the elevators only go up to the 17th floor, DeKeyser’s team had to build a second staircase, a spiral one this time, to link the two top floors. Other challenges included refitting the elevators and making an egress through the original bank vault.

“This will be maintained as a feature of the building,” McNair says of the vault. “It really hasn’t changed at all.”

McNair called the original bank building “an incredible space,” with a huge lobby with a coffered ceiling, a brass elevator bank, brass deposit box and murals painted by Walter Long, a local artist.

“It’s something you might expect to see going into a bank in Italy with a ceiling like that,” he says.

A renovation in the 1950s replaced many of the ornate details, though some, like the deposit box and the elevator bank, remain. McNair says the current redesign is trying to keep some of the feel of the original building.

“Today, things have changed, but they also haven’t. We see a big open space. We see the tiles from 1956. We see a mezzanine, not the original but mostly intact. We see a skylight. The spatial arrangement of the bank lobby was maintained.”

The deposit box is being retained as well, McNair says, even though the building is not functioning as a bank anymore.

“It’s just a nice piece,” he adds.

Story Contacts:
Will Yandell, Co-Founder,
Heritage Land & Development Inc., Memphis, TN
[email protected] 

Stephen McNair, Historic Consultant,
McNair Historic Preservation, Mobile, AL
[email protected] 

Phillip DeKeyser, Senior Project Manager,
White-Spunner Construction, Mobile AL

Mark Fogarty has covered housing and mortgages for more than 30 years. A former editor at National Mortgage News, he has written extensively about tax credits.