Restoration Boom

‘Meet Me in St. Louis’ Means Head Downtown

by Brian R. Hook

Redevelopment of historic buildings, including old warehouses and office buildings in downtown St. Louis, is luring residents back to the core of the city.

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“We have an amazing inventory of historic buildings,” says Jim Cloar, president and chief executive of the nonprofit group Downtown St. Louis Partnership.

Sixty-nine buildings have been restored since 1999 in downtown, totaling $1.3 billion in development, including the $52.5 million Paul Brown Building, the $25 million Banker Lofts Building and the $20 million Fashion Square Lofts Building.

More redevelopment is in the pipeline, totaling another $1 billion investment. Twenty-six buildings are being restored or are under development in downtown, including the $132 million Arcade Building and the $30 million Alexa Building.

In 2006 and 2007, 2,700 units of new housing units opened downtown, and there are currently more than 7,400 rental and sale units in the downtown.

Young and Old Buyers

A combination of young and old are moving downtown. Cloar says that the redeveloped residential buildings downtown are enticing to empty nesters who want to move back to the city now that their kids have moved out, plus younger people who want to live in a more exciting atmosphere than that in the suburbs.

Redevelopment of the historic buildings downtown into residential units would not have happened without an effort by the city to bring more retail and restaurant activity downtown, Cloar says. He says 70 new shops have opened in the past year.

“It makes downtown more of an inviting environment,” Cloar adds.

“Developers have recognized a lot of the value to the property downtown is related to what happens on the ground floor. We have seen developers be aggressive about making sure that the ground-floor uses are animated with retail and services.”

Adding retail has been an integral part of the plan to boost residential development in downtown, says Barbara Geisman, deputy mayor for development in St. Louis. She says that when development first started, there was not a market for retailers.

Therefore, the city focused on bringing in local boutiques before targeting national retailers. Geisman says the city also worked to keep businesses downtown.

“You can’t support a downtown retail environment on just eight-to-five business,” she adds. “Getting the business retention and the retail and residential development to all work together was a major part of how we approached getting everything done.”

State, Federal Rehab Credits

Much of the redevelopment of the historic buildings was helped by a state rehabilitation tax credit, in addition to federal tax incentives for historic preservation.

As with most government incentives, in addition to providing a financial boost for developers, the tax credits also provided an extra layer of regulation. “You have to work with the state and federal preservation officers to keep the character-defining elements of the building,” says David Dwars, director of multifamily housing at St. Louis-based Lawrence Group Inc., an architectural firm and developer.

Common examples include lobbies and entryways. Plus the exterior of the building is typically restored, along with ornamental plasterwork and ceilings.

The biggest challenge for redeveloping historic buildings, however, is that construction techniques were not as standardized in the past as they are today, Dwars says.

“Each building has its own unique character in the way that it was constructed,” he adds.

A lot of preliminary work is needed to avoid mistakes. “We spend a lot of time in the beginning poking around and seeing how the building is put together,” Dwars says.

“When you are running new infrastructure through the building, you have to be sensitive to how it was put together so you don’t damage any of the critical structural elements, while retaining all of the character-defining historical elements of the building.”

At the start of the redevelopment in downtown, most of the rehabilitation consisted of turning old warehouses or buildings used in textile manufacturing into what is now considered a standard-style loft, with high ceilings and exposed wood.

Many of the historic buildings left for redevelopment now consist of office buildings, which have lower floor-to-ceiling heights. While many warehouses have 20-ft ceilings, many offices have 9-ft ceilings. Dwars describes these as “soft-loft” projects.

“It’s more of a finished product,” he says. “It’s not as raw and industrial.”

These soft-loft redevelopments include the 17-story, 523-sq-ft Syndicate Trust Building, constructed in 1907. The $85.3 million renovation, once complete this summer, will include 102 condos, 70 apartments, parking and 19,500 sq ft of street-level retail.

Another example is the $125 million Park Pacific Building. Renovation of the 22-story, 470-sq-ft former Missouri Pacific/Union Pacific building, originally constructed in 1928, will include 108 condos, 50 apartments, 51,000 sq ft of office space and another 10,000 sq ft of space for street-level retail.

Residential units cost about $280 per sq ft and range in size from 820 sq ft to 3,800 sq ft. Presales began in June and are 42% sold. The project is schedule to be occupied in April 2009.

Rebuilding Old Buildings

Alberici Construction Co., a general contractor based in the St. Louis suburb of Overland, has worked on a handful of redevelopments in downtown. It is currently working with the Lawrence Group on both the Syndicate Trust and Park Pacific.

Dave Gough, a vice president with Alberici, compares working in downtown to working on the surface of a postage stamp. There is often no front, side or back yard, and buildings are often sandwiched between others, leaving no open space.

“You’ve got to coordinate your deliveries and your offsite parking with your employees,” Gough says. He adds that it’s much more labor intensive to hoist material and get people to their worksite than it is in suburban areas.

Another issue facing contractors during the rehabilitation process of historic buildings downtown is the presence of hazardous materials, Gough says. Often there is lead paint, asbestos flooring or asbestos in the heating and ventilation systems. Demolition and removal of the material is dangerous and time consuming.

Many of the structures have also been exposed to the weather for years.

“You’ve got old utilities where the valves break off in your hand when you go to shut them down,” Gough says. “On these historic buildings there are more surprises.”

The national downturn in the housing market might provide a challenge to the redevelopment of historic buildings into residential units. Gough says the downturn might impact projects in downtown St. Louis.

“Money is a lot harder to get,” he says.

Geisman, the deputy mayor, says there is still a strong market for units in the $250,000 and under range and for units in the $600,000 and up range. She says the difficulty downtown is currently in the middle of the market. She says people wanting to buy units in this range may have to sell a house before purchasing another property.

Despite the national downturn in the housing market, Cloar from Downtown St. Louis Partnership says St. Louis should not expect as many problems as cities on either coasts might due in part to the traditionally steady nature of the Midwest economy. Housing in downtown St. Louis remains strong.

“I think it might slow down a little,” Geisman says. “But what we’re hearing is that there is still a strong market for units in the $250,000 and under range and there’s strong market for units in the $600,000 and up range.”

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