Today’s high demand for commercial and residential
space appears to be in lock step with an unprecedented number of “adaptive
reuse” real estate developments – or re-developments of existing properties.
Here and around the U.S.
The Gandy Dancer, Allmendinger Building, Schlenker Hardware and the
State of Michigan Armory are examples of Ann Arbor buildings that – decades
ago -- began life with another mission, but have since been converted to
commercial or residential uses.
A New Consciousness
Adaptive reuse is the process in which structurally sound, older buildings
are developed for economically viable contemporary uses. They may be returned
to service in restored condition, but more often than not, they are subject
to renovation and adapted to today’s heating, cooling, technology and accessibility
requirements.
“The costs are too high to reproduce these historic structures today,”
says Mary Culver, who is Ann Arbor’s Historic Preservation Coordinator.
Moreover, she notes, the materials the builders used, like Michigan White
Pine, can’t even be purchased in lumber yards today.
Premium on Historic Character
There is also a “recycling” aspect to the reclamation of historic buildings,
but the reason they are so sought after is that they make economic sense.
Bill Kinley, president of Phoenix Contractors has restored a string of
commercial buildings around Washtenaw County that are now fully occupied.
He attributes the success of his buildings to “found” space: additional
square footage that can be either developed in the property, or added to
it to that results in positive cash flow from the project. His renovation
costs, he says, are always well under the cost he would bear to build a
similar-sized, contemporary building on a fresh piece of ground. And they
have unbeatable character.
Kinley is currently enveloped in the exhaustive process of gutting
the 1888 Flour Mill building in downtown Ypsilanti, trying to present the
“white box” he has promised later this year to the Bank of Ann Arbor for
its new Ypsilanti branch bank site. The Bank will occupy 3,000 square feet,
overlooking the Huron River. Another 3,000 square feet of grade level space
will be leased to another commercial tenant. Loft apartments with vaulted
ceilings will be created in 4,500 square feet upstairs, giving Ypsilanti
an upscale tier of downtown residential living.
Apartments at Ypsilanti High
Driving down Cross Street in Ypsilanti, it is hard not to be struck
by the stately, restored brick and limestone facade of Ypsilanti High School.
Detroit-based American Community Developers, which has done similar projects
in other parts of Michigan, has purchased the three-story, 160,000 square
foot building and is developing it into 100 apartments. Leasing activity
is reported to be surprisingly brisk. Many of the landmark’s classrooms
will turn into apartments themselves, complete with the classic high ceilings
and full-height windows. The facility last served as a high school in 1973.
Elisabeth Knibbe, whose architectural firm has been involved with the project,
regretfully notes that the terrazzo floors were beyond repair, but that
three vestibule lobbies remain to add character. The school’s gym and auditorium
have been razed to create a garden courtyard.
Condominiums at the Armory
Veteran developer Ed Shaffran corralled another long-vacant building
in downtown Ann Arbor – the Armory, which was built in 1911. After waging
a protracted battle with the City for his approvals, he built out thirteen
condominiums which were first occupied in 1998. Shaffran also sought to
develop residential units in the Ann Arbor Theater building on Fifth Avenue,
which he acquired last year. His architects submitted a seven-story concept,
but it proved too expensive to build, despite the residential demand in
the marketplace. In the end, Shaffran set his sights on office use. He
has completed construction/renovation of a two-story, 12, 500 square foot
office building and leased it to a company that designs web pages for Fortune
500 companies: WebElite. Jacques Habra, president, is moving his staff
into the new quarters this month.
Michigan, Federal Tax Credits
Favorable tax treatment for developers of commercial historic properties
is a universally appealing aspect of adaptive reuse. Though it is a complicated
and protracted application process, properties on the National Register
of Historic Places are entitled to a 20 per cent federal tax credit on
their rehabilitation costs. Michigan has also enacted an historic tax credit
of 25 per cent, though no more than a total of 25 per cent of the rehabilitation
costs may be taken by the developer or owner. The program is administered
at the State Historic Preservation Office in Lansing by Bryan Lejewski
(517) 373-1631.
In Ann Arbor, software companies are a driving force in the renovation
and rehabilitation of older structures. As a practical matter, connectivity
steers them downtown because their high speed internet connections usually
cannot be established out by the expressway beltways. But aesthetically,
many software companies simply mandate downtown office space because of
the character and amenities they find there.
Bill Milliken, CCIM