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DEVELOPERS
ARE OPTIMISTIC THAT THE INCREASE IN THE NUMBER OF RESIDENTIAL UNITS
DOWNTOWN BY ALMOST 20 PERCENT WILL CREATE A MORE VIBRANT URBAN ENVIRONMENT
By Peter Downs
Sam Glasser is bullish on residential development in downtown St.
Louis. “We see tremendous upside potential in the loft district,”
says Glasser, the developer of the King Bee Lofts, the Knickerbocker
Lofts, Windows on Washington, and Fashion Square.
The
biggest loft conversion on Washington Ave., and the
project that pulled the loft district into the old
downtown east of Twelfth Street, is the Merchandise
Mart Building. |
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The Washington Avenue loft district in St. Louis “is still the least
expensive loft district in America, in its tier,” he says. Compared
to a Denver, Atlanta, or Indianapolis, the historic lofts in St.
Louis “are a remarkable value,” says Glasser, who splits his time
between St. Louis and New York. “A lot of people not from St. Louis
are buying these lofts, because they are coming from markets where
they are used to paying $250-$275 per foot...here we are getting
$125 per foot.”
The buildings on Washington Avenue, the center of loft development
in downtown St. Louis, reflect the street’s history as one of the
most fashionable avenues in America. The street itself is an extension
of Eads Bridge, the first bridge over the Mississippi River. In
the late nineteenth and early twentieth century it was the front
door of St. Louis, and one of the main centers of fashion in the
United States. High-end clothiers with shops in Paris and New York
also put shops on Washington Avenue in St. Louis.
Designed by the best architects of the time, the buildings on Washington
Avenue have a level of detail and ornamentation unmatched by buildings
in other loft districts, Glasser says. Washington Avenue lofts “are
much nicer than lofts in Denver or Cincinnati,” he says, and that
is why they are starting to attract buyers from across the country.
"WE'RE
SELLING A LIFESTYLE... NOT JUST APARTMENTS."
Ron Silverman
regional vice president,
Historic Restoration Inc.
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The biggest loft conversion on Washington Avenue, and the project
that pulled the loft district into the old downtown east of Twelfth
Street, is the Merchandise Mart building. The 213-unit building,
renovated by New Orleans-based Historic Restoration Inc. (HRI),
features a garden on the rooftop and a 6,000-square-foot restaurant
on the first floor. Most of the apartments have 14-foot ceilings,
but eight units have 30-foot ceilings and second-story lofts. The
building, which just opened in January 2003, also has a fitness
center, and a clothing store with a martini bar.
“We’re selling a lifestyle...not just apartments,” says Ron Silverman,
regional vice president of HRI.
The loft boom in St. Louis is not confined to Washington Avenue,
however. Two blocks south of the Merchandise Mart, in the heart
of the old downtown surrounding the Old Post Office building, Craig
Heller, has several projects underway near his completed Tenth Street
Lofts project. With neighboring projects by John Steffen’s Pyramid
Development and the Roberts Brothers, the trio of developers are
in the process of construction of 320 loft residences around the
historic Old Post Office.
Across downtown to the south, HRI is set to begin conversion of
two of the historic Cupples Warehouse buildings into 192 loft apartments.
As at the Merchandise Mart, 60 percent of the units will rent at
market rate, 40 percent will be for low-to-moderate income renters.
Having discovered at the Merchandise Mart that they had underestimated
the demand for two bedroom units, “at the Merchandise Mart we have
a waiting list for two bedroom units,” Silverman says, and the building
is only two-thirds leased, at Cupples “we’re eliminating the three-bedroom
units, and we’ll gross out more two bedrooms than ones.”
The $42 million Cupples project also will have landscaping in the
buildings, a place to barbeque, a fitness center, and a two-story
6,000-square-foot restaurant facing the Eagleton Courthouse. “There
is a lot of foot traffic on that street, as it is between the baseball
stadium and the Savvis Center,” Silverman says. The Savvis Center
is home to the St. Louis Blues hockey team and a venue for concerts.
HRI also is negotiating with Bank of America to acquire two more
of the Cupples warehouse buildings, which it would begin converting
to residential lofts after the market absorbs the first two buildings.
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The
loft boom is not confined to Washington Ave., in the
heart of downtown find the Tenth Street Loft.
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Across downtown, the new housing boom is increasing the number of
residential units by almost 20 percent. As of September 9, 2003,
downtown St. Louis had 5,854 residential units, according to the
Downtown St. Louis Partnership. Another 605 residential units were
under construction, and 414 more were scheduled to start construction
by the end of the year. Construction on at least 75 more units was
slated to begin after January 1, 2004.
“We feel the market can absorb that product,” says Jim Cloar, president
and CEO officer of the Downtown St. Louis Partnership. “We feel
really good about residential housing downtown. There is an increasing
diversity of housing available, both in price and in options.”
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The
Washington Avenue loft district is starting to attract
buyers across the country. Above is a look inside
a King Bee loft. |
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“It is great stuff,” Glasser enthuses. “Every vacant building is
slated for development... They had been lying around for 30 or 40
years with nothing going on.
“Over the next five years,” he adds, “I think you will see a lot
of excitement downtown. Forty to 50 blocks will fill up. Restaurants
are opening up. We will have a very mature, culturally diverse,
dense neighborhood.”
Silverman is a bit more cautious. “If everything happens that Downtown
St. Louis Partnership says,” he notes, “we would be long on units,
and no one knows what the market is.”
The downtown residential development rush is fed by historic tax
credits. The state of Missouri has a program that, when piggybacked
onto federal historic tax credits, can return to developers 45 percent
of their allowable costs. And, unlike the federal historic tax credits,
the Missouri historic tax credits are transferable, so developers
can sell them to quickly get cash back.
Silverman was quite blunt about the role of tax credits in downtown
loft developments. HRI’s projects, he says: “Would not happen without
federal and state historic tax credits.”
Yet, away from downtown, residential development in the city is
on the upswing, too, even without recourse to historic tax credits.
Patrick Sullivan, executive director of the Home Builders Association
of St. Louis (HBA), says that: “Housing in the city is coming back
more than people realize. It snuck up on us.”
The HBA tracks the number of single family and multifamily building
permits issued by city government. According to Sullivan, in the
first seven months of 2003, the city issued nearly 50 percent more
permits for new multifamily housing than it had in all of 2002:
443 to 302. The number of permits for multifamily rehabilitations
was on track to exceed the previous year’s total, too. New single
family construction was about the same as in 2002, a yearly pace
of between 130 and 140 homes, but that is 10 times the amount of
new home construction seen in the city as recently as 1999. Rehabilitations
to single family homes was far above last year’s pace, 151 permits
in the first seven months of 2003 compared to 134 permits in all
of 2002.
"HOUSING
IN THE CITY IS COMING BACK MORE THAN PEOPLE REALIZE.
IT SNUCK UP ON US.
Patrick Sullivan
executive director,
Home Builders Association
of St. Louis
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“A lot more is going to be happening,” Sullivan says. HBA members
were looking into a variety of new homes in the old Gaslight Square
area east of Grand Center and holding a big event to promote them
in late 2004. “If it all falls into place, it will be the largest
splash on city housing in the history of the city,” he notes.
There is no one reason for the renewed interest in home building
in the city, he says. “It is just the right place at right time.
Land in the suburbs is getting harder to find and more expensive,
and city neighborhoods becoming more attractive to builders and
buyers.”
A half-a-dozen homebuilders already are at work developing subdivisions
or scouting land in the city, he says, including McCormack Baron,
Vatterott Homes, Westin, M. Jaffe Development, McBride & Son, and
Taylor-Morley Homes, Sullivan says.
City home building could get another boost from the RCGA and the
Greater St. Louis Economic Development Council if they move ahead
with plans to launch a multi-million dollar St. Louis Revitalization
Real Estate Fund. The Fund would focus on expanding market rate
housing and related mixed-use development in and around the region’s
central city.
This real estate fund would act essentially as a venture capital
fund, providing initial capital that it would recoup when residential
properties are sold, and which it could then invest in new projects.
The goal is to get more people living in the central city in order
to create a more vibrant mixed-use urban environment.
"WE
FEEL THE MARKET CAN ABSORB THAT PRODUCT. WE FEEL REALLY
GOOD ABOUT RESIDENTIAL HOUSING DOWNTOWN. THERE IS
AN INCREASING DIVERISTY OF HOUSING AVAILABLE, BOTH
IN PRICE AND IN OPTIONS."
Jim Cloar
president and CEO,
Downtown St. Louis
Partnership
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While still in the planning stages, people involved with the discussions
say it would probably focus more on new housing, as rehabilitations
are getting a big enough boost from historic tax credits. The Fund
is modeled after very successful similar funds in Boston, Chicago,
Los Angeles and San Francisco.
If the Fund could be used for assembling land, it would be tremendous,
says Brett Hardesty, president of Hardesty Homes and 2004 president
of the HBA. “There is a tremendous amount of land available in St.
Louis, but it needs to be assembled from multiple owners,” he says.
Peter Downs is a St. Louis-based free-lance writer.
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