A real estate investment firm has closed on its fourth commercial purchase in Birmingham, Alabama, in three months, underscoring the city’s appeal among investors thanks to its low barrier to entry and tax incentives.

Sixty West bought 600 20 St. N., a 26,116-square-foot office building in downtown Birmingham, from local investor JLR LLC for $3.3 million, or about $126.36 per square foot, according to Casey Howard, a broker who represented the seller in the deal. Howard, vice president with Harbert Realty, has represented Sixty West in three other commercial deals in Birmingham since November.

Sixty West, which is based in Dexter, Missouri, has been drawn to Birmingham for several reasons including the vast majority of the downtown area being in an Opportunity Zone, an area designated as economically distressed that qualifies for tax breaks as part of a federal program.

“Most of downtown Birmingham is one big Opportunity Zone, so it’s very attractive for groups to look in this market,” Howard said.

Other reasons include the city’s favorable tax rates and urban revitalization, said Howard.

“Low barrier to entry is a big one, [and] property taxes in Alabama are certainly lower compared to other markets these groups are investing in,” Howard said, speaking generally about out-of-state investors. “We also have a huge revitalization of downtown. … We haven’t quite peaked, so there’s a lot of value that you can still find out there.”

Alabama boasts the nation’s second-lowest property tax rates, only behind Hawaii, according to Wallet Hub, a financial data platform. Alabama’s effective real estate tax rate is 0.42%, according to Wallet Hub.

The property at 600 20 St. N. sits in the heart of downtown Birmingham, which is undergoing a long-overdue resurgence of commercial development. Historic properties are being converted into high-rise apartments and residential buildings, and the influx of medical and tech companies are fueling office developments.

The University of Alabama at Birmingham and its associated hospital, the largest in the state, is the city’s largest employer. Companies such as Shipt, the online same-day grocery service founded in Birmingham that retailer Target bought in 2018 for $550 million, have helped fuel job growth.

Over the past few months, Sixty West acquired several other properties in Birmingham. Those deals include:

2201-2205 3rd Ave. N., a 10,000-square-foot retail property that Sixty West bought from Birmingham Common House LLC for $1.6 million in December, according to CoStar data.
2121 First Ave. N., a 13,500-square-foot office property that Sixty West bought from a local investor, Howard said in an interview.
2127 First Ave. N., a 9,000-square-foot office building that Sixty West bought from a local investor for $2.5 million in November, according to CoStar data.

Sources: Costar Business Market News