Developing interest in downtown

Old buildings draw Va. entrepreneur into rehab and rental

May 02, 2000|By Tom Pelton | Tom Pelton,SUN STAFF

Having just bought the downtown Baltimore office building, he hunts and bobs through darkened rooms in search of the suite where the company's president faced an unhappy employee wielding a pair of .32-caliber automatic pistols.

Searching a corner office at 501 St. Paul St., David Hillman fingers a hole in the dirty plaster. Could this be it, the bullet hole from the infamous 1930 murder of Maxwell C. Byers, head of the Western Maryland Railroad?

Another mystery is this: What is Hillman doing in this vacant and haunted-looking 15-story tower?

A Virginia-based developer who has made a career out of managing suburban apartment complexes, Hillman has made a radical shift recently and is buying old buildings in downtown Baltimore that other developers have been afraid to touch.

In the past five years, Hillman has invested more than $100 million buying and renovating seven properties downtown -- including the Hecht's building at 301 W. Lexington St., Charles Towers at 222 N. Charles St., and now the Stanbalt (for Standard Oil Baltimore) building at 501 St. Paul St.

Hillman, chairman of Southern Management Co., plans to begin gutting the Stanbalt building this month, with the goal of transforming it by next summer into 202 apartments to rent between $700 and $2000 a month. He bought the building and an adjacent parking garage for $3.6 million in January.

But Hillman is no romantic preservationist with quixotic dreams of saving the city's distinctive old buildings, such as this 1923 tower with its ornate pillared entrance and storied past.

Hillman is a hard-headed former accountant who says he's been driven away from the overpriced suburban Washington, D.C., real estate market. He's learned that he can make money in Baltimore by capitalizing on a rise in demand for urban apartments and historic preservation tax credits.

These federal and state tax programs give developers an incentive to fix up older buildings instead of tearing them down, and could save Hillman about $6 million on the Stanbalt building project alone.

"It's capitalism. People like me are driven by greed. If there's a profit in projects like this, then people like me will do it," Hillman said as he walked through the derelict building on a recent afternoon.

"But I also dream. I love old buildings like this, and think those that are functionally and structurally sound are worth saving -- as long as the government is subsidizing it," Hillman said. "But saving an old building for the sake of saving an old building is just stupid."

Over the past 35 years, his company has bought 69 apartment complexes, mostly built from the 1950s, 1960s and 1970s, in suburban Montgomery and Prince George's counties and suburban Baltimore.

Since 1995, he's ventured into the downtown Baltimore market, buying the partially vacant Charles Plaza at Charles and Saratoga streets, for which Hillman plans a major overhaul; the 230-unit Horizon House at 1101 N. Calvert St., which Hillman renovated; the 286-unit Roland Ridge on Cold Spring Lane near Interstate 83; and the 190-unit Marlboro Square apartment building at Eutaw and Lombard streets.

"Although he comes from a suburban setting, David has seen enormous opportunities in the city that other developers who have been in the city for years haven't seen. And I think that David has profited from it, and so has the city," said Laurie Schwartz, the city's deputy mayor for economic development.

Schwartz said Hillman proved skeptics wrong by turning a long-abandoned 144-unit apartment building at 111 Centre St. into the successful Gallery Towers. Although the building was in an area some considered risky, managers leased all the units in less than three months, all but one of the residents coming from outside the city.

City officials point to this project as evidence of a large demand for more apartments downtown.

M. J. "Jay" Brodie, executive director of the Baltimore Development Corp., said many consider Hillman brave for taking on the conversion of the former Hecht's department store into 173 apartments.

This is in an area on the west side of downtown that has seen its real estate values plummet in recent years, although the city is trying to revitalize the neighborhood with a $350 million urban renewal project.

"David Hillman has had vision where others have stood by and wrung their hands and said, `Residential can't happen in downtown Baltimore,'" said Jimmy Rouse, head of the Historic Charles Street Association.

"As an out-of-towner, he saw opportunity where Baltimoreans have been too burdened by memories and pessimism to see that anything could happen. Now, he's leading the way to a new renaissance in downtown Baltimore."

Hillman doesn't describe himself as a visionary or a savior of cities. He calls himself a "bottom fisherman" -- someone who buys real estate nobody else wants after the owners run into financial problems or have their properties auctioned off at tax sales.

The Stanbalt building is his most recent catch.

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