Birmingham’s tallest tower in receivership after decline in occupancy

According to a recent report by the Birmingham Business Journal, Shipt Tower has entered into receivership due to a decline in occupancy and revenue.

Read on to learn what we know and what this means for Birmingham.

Shipt Tower struggling post-pandemic

According to the Birmingham Business Journal, recent financial filings show that downtown Birmingham’s Shipt Tower has been placed in receivership as the owner, a subsidiary of Hertz Investment Group, has been unable to meet the financial obligations of the loan.

According to the Birmingham Business Journal’s report, HPT Sunbelt Porfolio LLC was unable to make its payments largely due to a decline in occupancy in the tower. The building’s longtime anchor tenant, Wells Fargo, relocated its offices in 2019. Although Shipt quickly took Wells Fargo’s place, overall occupancy continued to decline.

What does this mean for Birmingham?

According to Lyndsy Yim with SRS Real Estate Partners, the issues facing Shipt Tower reflect a trend with commercial real estate downtown.

“My colleague, Abra Barnes and I have worked in downtown for nearly a decade. Currently, we’re seeing high rents, high pass-throughs and high construction prices that are not sustainable in the current market condition.”

Lyndsy Yim, First Vice President, SRS Real Estate Partners

So, how can we fix it? Lyndsy recommends that Birmingham needs to prioritize connectivity and activation plans for downtown spaces—without these plans, it’s time to re-evaluate if current asking rents and high triple net leases (NNN) are sustainable.

“We need partnerships between the city and economic development organizations that can host more district events to support small businesses and bring foot traffic downtown.

Organizations like REV Birmingham have done a great job of activating downtown streets. We need more organizations to follow suit!”

Lyndsy Yim, First Vice President, SRS Real Estate Partners

About Shipt Tower

Located at 420 20th St N in downtown Birmingham, the Shipt Tower was originally built in 1986 as the corporate headquarters for SouthTrust Corporation. At 454 feet tall—with a total of 34 stories—the tower has been the tallest building in Birmingham for nearly four decades.

After nearly a decade as the Wells Fargo Tower, the building was renamed in 2019 in honor of its new anchor tenant, grocery delivery provider Shipt.

What are your thoughts on this issue facing Shipt Tower? Tag us @bhamnow to let us know.