Fruitdale Lofts, photo of exterior at sunset. Image courtesy of Balthazar Ely
Adaptive reuse projects have enjoyed a resurgence in recent years, spurred in the multifamily sector by a shortage in skilled labor, rising construction costs, fewer reasonably priced investment opportunities in core markets, and the nation’s ongoing affordability crisis.
In saving beloved buildings from the wrecking ball, adaptive reuse deals can get entire communities rooting for them: They harness the power to drive economic development, improve sustainability and inspire a renewed sense of pride and identity.
Fruitdale School Lofts
In Wheat Ridge, Colo., many local residents had a deeply emotional attachment to The Fruitdale School, which had served the city and Jefferson County as an elementary school and community center for decades before closing in 2007.
Fruitdale Lofts, photo of Unit 113. Image courtesy of Balthazar Ely
Designed in 1927 by influential Denver architect Temple Buell, the Fruitdale School is on the National Register of Historic Places and is Buell’s oldest remaining school building. Sadly, the functionally obsolete property had sat vacant for a decade while authorities debated redevelopment plans. The community rejoiced when, finally, a public-private partnership of Fruitdale School Partners, the city of Wheat Ridge and the Wheat Ridge Housing Authority paved the way for a heartfelt restoration by Hartman Ely Investments.
The Boulder, Colo.-based development, investment and property management firm specializes in urban redevelopment, sustainable development and renewable energy. Its founding partners, Jim Hartman and Susan Ely, also happen to be architects with the particular skill set and patience required to bring the 16-unit Fruitdale School Lofts to market.
In Hartman’s view, this was the hardest project the firm has ever undertaken. “We took two years to try to figure it out before we built it, and the figuring-out part was mostly financial,” he revealed. “The overall project cost was just under $6 million, and that’s a very large amount of money to spend to produce 16 apartments.” Financing the project required capital from a mix of sources: developer equity; tax credit investments; a construction loan from Citywide Banks; a Freddie Mac permanent loan through Hunt Mortgage; loans from the city of Wheat Ridge, Wheat Ridge Housing Authority and Jefferson County Community Development; a State Historical Fund grant; a Charge Ahead Colorado EV charging station grant; and Xcel Energy solar power credits. Obtaining federal-level Home Program financing required that five of the apartments be reserved at a lower rent level for lower-income residents, according to Hartman.
The nearly quarter-million-dollar grant from Colorado’s State Historical Fund paid for some of the restoration—led by architectural firm The Abo Group and contractor Palace Construction—which preserved plaster, wood and glass details, as well as several historic interior features. The former school’s huge operable windows, high ceilings, chalkboards and basketball backboards from the prior school have since become marketable assets that differentiate the new lofts.
The city’s allocation has paid off in a broader sense: “Another reason the city put so much of its own subsidy money into it is that the project is becoming an economic revitalization catalyst for this area: $1.5 million of tax credits paid down (the city’s) loan soon after construction,” Hartman noted.
Fruitdale Lofts, photo of Historic Hallway. Image courtesy of Balthazar Ely
An unusual aspect of the restored building is that it’s solar powered, a rare feature due to the complexity of putting modern solar panels on a historic building. Hartman Ely Investments negotiated with the National Park Service, and the agreed-upon solution comprised roof-mounted solar panels plus a ground-mounted solar installation at the rear of the property on another piece of land annexed to the original parcel—the result of a creative land swap with the adjacent property owner. All of the apartment residents pay only about a third of the cost for their power, as compared to other apartments in the area.
This parcel is located in a transitional part of Wheat Ridge, so, according to Hartman, the land was very affordable, which is atypical in this region and key to the project’s feasibility. The Wheat Ridge Housing Authority, whose mission is to remedy the area’s affordable housing shortage, owned the project and site.
“We’ve been doing adaptive reuse for almost 40 years,” said Hartman. “We’ve also done some ground-up new construction, but this is really what we love—helping communities revitalize vacant or almost abandoned buildings into something special. In Wheat Ridge, we’ve helped the community preserve a Temple Buell artifact.”
South Side on Lamar
At the other end of the spectrum from boutique residences is Dallas’ South Side on Lamar, the largest multifamily adaptive reuse project in the U.S., according to Yardi Matrix data. Located in the South Downtown neighborhood, South Side on Lamar is the new face of the former Sears Roebuck & Co. Catalogue Merchandise Center.
South Side on Lamar
Also known by Dallas locals as the Sears Building, the massive structure was erected in 1910 to serve as a warehouse and distribution center, the first Sears warehouse outside the company’s Chicago headquarters. Lang & Witchell designed the building, along with additions to the structure in 1915 and 1916, bringing the size of the warehouse to 1.5 million square feet situated on 18 acres. In 1993, Sears closed its regional office due to consolidation and vacated the complex.
Matthews Southwest Corp., based in Lewisville, Texas, bought the 798,163-square-foot asset in 1997 and brought it to market as a mixed-use residential property in 2000. The project is a registered National Historic Landmark and a 2002 recipient of a Historic Rehabilitation Award from Preservation Texas. While South Side on Lamar’s design provides a connection to Dallas’ colorful history, its proximity to the proposed high-speed rail line connecting Dallas and Houston underscores its current relevance as a transit-oriented development.
Inside, Matthews Southwest Corp. and Dallas architectural firm McCaslin Cowden have reimagined the Sears Building as a mix of retail and 452 one-, two- and three-bedroom loft apartments. Throwbacks to the building’s former use, most apartments contain oversize concrete columns and exposed pipes.
Hardwood floors date back to 1913 and bear scars from the passage of dollies. Huge metal Saino fire doors with rusty handle fasteners that read “Patented January 24, 1911” guard the stairwells. An area on the first floor, now known as the Artists’ Quarters, served as a thoroughfare for trains traveling right through the building, loading and unloading cargo in spots now occupied by shops and galleries.
While Bloomfield, N.J.-based developer Prism Capital Partners doesn’t necessarily seek out structures ideal for adaptive reuse, it’s found a niche in the turn-of-the-century buildings that were constructed close to train stations in developing downtowns that are now starting to bounce back. “We’re seeking out the (environments in which) that adaptive reuse buildings might find themselves situated,” Principal Eugene Diaz explained.
One of those locales is West Orange, N.J., where Prism Capital Partners recently unveiled Phase 1 of Edison Village, an industrial-to-residential redevelopment of the historic Thomas Edison Invention Factory and Commerce Center. Built in 1913 by Thomas Edison, the factory complex served for decades as a manufacturing site where employees produced storage batteries used in light delivery vehicles, automobiles, railroad signals, industrial applications and mining equipment.
Edison Village’s first phase encompasses 21 acres on Main Street in the heart of West Orange’s Downtown Redevelopment District and features 18,400 square feet of retail space and a 650-space parking structure. The completely renovated and reconstructed 100-year-old factory, known as the Edison Lofts building, designed by Minno & Wasko Architects and Planners, introduces 300 studio, one-, two- and three-bedroom market-rate residences, ranging from 590 to 1,500 square feet, as well as 20 penthouse duplex residences. Minno & Wasko took advantage of the historic factory’s existing architectural character by incorporating 14- to 16-foot ceiling heights and 10-foot replica replacement windows.
Prism Capital Partners has completed around a quarter-billion dollars in adaptive reuse projects, giving the firm keen insight into what features truly resonate with residents. “Human beings like uniqueness, and they will pay extra for it,” noted Diaz, adding that the premium is usually necessary because the cost of doing adaptive reuse projects is often on par with ground-up development.
But as Diaz points out, the value of adaptive reuse projects lies in their ability to bring to market unique living options that ultimately draw greater demand, generate higher profits and command more competitive rents “than a typical four-story, wood-frame, suburban apartment building.”
Edison Village Main Street
The Right Choice
These projects can uncover lots of unexpected surprises. “The general contractor world does not get paid enough to take the kinds of risks inherent in existing conditions,” remarked Prism Capital Partners Principal Eugene Diaz. Prism Capital Partners is a developer and also a contractor. “Unless you are both, I wouldn’t advise entertaining adaptive reuse projects,” he added.
When evaluating adaptive reuse deals for multifamily redevelopment, it’s the prior construction of the building and its floor plate that matter—not the prior use, according to Diaz. Prism Capital Partners is drawn to poured concrete structures because they present fewer fire-proofing issues. The company also looks for modules with the depth and size that will best translate to a standard apartment building.
“A smaller, high-story office building on the fringe of some downtown might adapt really well if it was built out of concrete and not steel, and it has a nice floor plate with a window and core depth that’s 30 feet,” Diaz commented. “Sometimes the floor is so much deeper on these industrial buildings.”
The rewards of adaptive reuse projects don’t come easily in multifamily: Within the constraints of an existing, sometimes century-old building envelope, you have to create contemporary apartment units in a structure that was designed for a very different use.
Therefore, it pays to spend a lot of time up front on design—a critical component to success and perhaps the biggest challenge. According to Diaz, “You have to be very creative in terms of your layouts in order to get as much functionality and usability out of the building and the site.”
You’ll find more on this topic in the October 2018 issue of MHN.