Gothic Drama + Modern Lofts = Mixed-Use Success

Filed in Awards, Multifamily by on June 6, 2018 0 Comments

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The Arcade, a 100-year-old office and retail block, stood empty in downtown St. Louis for 30 years. The roof had been neglected and water had streamed throughout the buildings, with the worst damage on the upper levels.

Jeff Huggett, partner in Dominium, a Minneapolis multifamily developer, said that before taking on the project the company “had to do a lot of structural reconnaissance with the contractor, going over the building section by section to see where the damage was – and it ended up a little less bad than we’d thought.”

It still was a massive project, one that used state and federal Historic Tax Credits – about $25 million from the state and another $20-25 million from the Feds. It also used New Markets tax credits to address the commercial section, and the Low-Income Housing Tax Credit program for the former offices, now apartments. The rest was financed through U.S. Bank. At $219.45 per square foot and a total of 548,499 square feet, that worked out to more than $100 million in financing.

This grande dame is actually two C-shaped buildings with a courtyard between them that isn’t visible from the street.

The commercial area – a two-story interior rib-vaulted shopping arcade – needed to be entirely rebuilt. The ceiling, its most striking feature, had been painted by hand in a herringbone pattern and was severely water-damaged. Dominium had it restored – a $100,000 job – because “going quality” would attract residents who appreciated the effort and would bring positive change to the neighborhood.

The 19th floor had housed mechanicals and the elevator mechanism, but Dominium renovated that space into a clubhouse and party room. Because it was set back 20 or 30 feet from the outside edge of the building, it wasn’t visible from the street. That allowed the developer to install big, non-historic plate glass windows that deliver an incredible view of the St. Louis Gateway Arch.

The commercial space has a single tenant – the Gateway Campus of local Webster University. “We wouldn’t have taken on the project without a single long-term tenant,” said Huggett. “We’re residential developers, and we didn’t want to have to manage lots of small commercial leases.”

The 282 residential units have high ceilings that expose new duct work and sprinklers, so even smaller units feel spacious. Most units have one or two bedrooms, with about 10% of the units having three. “The three-bedroom units flew off the shelf,” said Huggett, “and the two-bedrooms went fast.”

A large painting studio was a huge draw for the local arts community. Artists who met the work and income requirements qualified for subsidized rents. First came the painters, then artists of all sorts who felt at home. All told, various artists snapped up 200 of the 282 units.

New developments have followed the Arcade into the downtown area: a Marriott Autograph boutique hotel and apartments in the former Union Trust building, 207 rental units planned for The Chemical Building, and a mixed-use project in the old Railway Exchange building, a block from the Arcade.

Because of the care and scope of the Arcade’s restoration, the building was honored as a Finalist in the Adaptive Reuse category of NAHB’s 2017 Pillars of the Industry awards. Entries are now being accepted for the 2018 awards program: Learn more on the Pillars website.

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