Opportunity Zone Financing Brings Workforce Housing to Downtown Birmingham, Alabama

Opportunity Zone Financing Brings Workforce Housing to Downtown Birmingham, Alabama

Market Lofts on Third turned a long-vacant office building in downtown Birmingham into 192 units of workforce housing. Photo credit: Opportunity Alabama

The Historic Lofts District lies in the heart of downtown Birmingham, a northern Alabama city with a population of roughly 196,518. The neighborhood, once sparsely populated, has seen substantial residential growth since the 1990s thanks to the expansion of the University of Alabama's educational and medical facilities, the construction of a new baseball stadium and public parks, and ongoing investment. Although this area's housing supply has expanded to meet demand, a shortage of workforce housing persists.

Despite the area's broader renaissance, some downtown buildings remained vacant for many years. A combination of Opportunity Zone funding and historic tax credit equity enabled the development of Market Lofts on Third, which transformed a vacant downtown building into 192 units of attainable housing.

Reuse and Preservation

The development of Market Lofts on Third began as an effort to revitalize a vacant 140,000-square-foot property in downtown Birmingham. Birmingham's Municipal Market opened in 1923 and served a number of commercial purposes throughout its lifetime, but the building had been vacant since its last tenant, the American Red Cross, left in 1998.

Developers Ed Ticheli, Brad Creasy, and Phil Caccese, along with capital partner Opportunity Alabama, saw a chance to reimagine the building as housing for residents whose incomes are too high to qualify for subsidized housing but too low to afford most residential properties in the city center. Alexander Flachsbart, founder and chief executive officer of Opportunity Alabama, says the sponsor team saw an opportunity to revitalize a long-vacant building, dedicating it to a much-needed use in the community.

Market Lofts on Third includes an interior courtyard created by cutting a lightwell through the historic building. Photo credit: Opportunity Alabama

Construction on Market Lofts on Third began in 2023 and involved significant modifications. The design by Hendon + Huckestein Architects involved cutting a lightwell through the center of the five-story building, creating a central courtyard for residents. This intervention allowed the developers to adapt the interior space into residential units with ample natural light while meeting historic preservation standards. Market Lofts on Third opened that same year and reached stable occupancy by 2024.

About Market Lofts on Third

Market Lofts on Third consists of 192 units, including 93 studios, 96 one-bedroom apartments, and 3 two-bedroom apartments. Flachsbart reports that roughly 189 of these units are affordable to households earning 80 percent of the area median income. Listed rents range from $855 to $1,393 for a studio apartment, $1,047 to $1,377 for a one-bedroom apartment, and $2,421 for a two-bedroom apartment.

Each unit is equipped with quartz countertops; large windows; and a full set of appliances, including a dishwasher. Residents have access to a rooftop deck and landscaped inner courtyard with gathering space and a fire pit as well as a pet spa, resident lounge, onsite laundry facilities, and professional building management. The building is within walking distance of several restaurants, coffee shops, grocery stores, and parks as well as the Sloss Furnaces National Historic Landmark, a museum and arts center. Residents also receive a discount on membership in a veteran-owned gym, which provides personal training services, located on the ground floor of the development.

In addition to these amenities, Opportunity Alabama offers a rent-splitting program that allows residents to pay rent in installments, providing greater flexibility. The organization also helps fund a local nonprofit, the Flagstone Initiative, which offers zero-interest loans and free financial counseling to residents who fall behind on rent.

Financing

Market Lofts offers attainable housing for workers in a competitive downtown market. Photo credit: Opportunity Alabama

The development of Market Lofts on Third cost roughly $36 million. The project received a $19.6 million loan from Fannie Mae; $5 million through the Alabama Historic Rehabilitation Tax Credit, a 25 percent refundable tax credit for historic rehabilitation; and roughly $5 million in nonrefundable federal historic tax credit equity syndicated by Rise Capital Partners. The project's largest equity investment came from OPAL 1, a $19 million Opportunity Zone fund raised by a wholly owned for-profit benefit corporation subsidiary of Opportunity Alabama. Opportunity Alabama was founded in 2018 after Flachsbart recognized the community and economic development potential of the Opportunity Zone provisions of the Tax Cuts and Jobs Act of 2017. Other financing sources included a combination of local and national community development financial institutions.

A Home for Urban Workers

Market Lofts on Third delivered workforce housing without the need for operating subsidies while reusing and preserving a staple of Birmingham's downtown landscape. According to Flachsbart, many residents work in nearby businesses such as bars and restaurants, barbershops, and a local distribution center. "We have people that work downtown living in our building and contributing to an inherent vibrancy," he said. "It's got exactly kind of the workforce makeup that we thought we would have in really high-quality housing that's adjacent to where they want to live, work, and play."