Housing conversion nears for historic Oella Mill

Va. developer plans luxury apartments

April 05, 2005|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

A developer with a history of converting old office and commercial space in Baltimore into luxury apartments is about to buy the historic Oella Mill near Ellicott City to try the same sort of transformation.

David H. Hillman, chief executive officer of Virginia-based Southern Management Corp., is planning to turn the 200,000- square-foot building - used until recently by artists and antiques dealers - into about 170 residential units with interior parking. He expects to close on the $5.5 million deal in about a week and a half, and has workers there now cleaning out the inside of the mill.

It's a moment some thought they would never see. The deteriorating brick building, perched at the western edge of Baltimore County and overlooking the Patapsco River, has seemingly been on the verge of sale for years. A Cleveland real estate company battled to get the zoning changed so it could build 175 apartments but backed out of the purchase last fall.

There's water damage. The roof needs to be replaced. Brickwork must be repaired. Hillman, who expects to invest about $30 million in the building including the purchase price, said he may be overpaying but thinks the deal is worth the effort for a company that holds on to its properties for years.

"We're patient," said Hillman, whose apartment complexes include the Atrium and the Standard in Baltimore, both projects that were converted from other uses. "It's a neat building, and it's going to lend itself very well to residential use. ... There's enormous windows."

The deal-closer for him is that the previous buyer under contract, Forest City Enterprises Inc., had already lined up $3 million in state historic tax credits for the restoration. Forest City could not be reached for comment.

Owners Peter Ruff and Daniel Stone did not return calls seeking comment.

Robert F. Freeze Jr. of Commercial Real Estate Investments LLC, the broker who represented both parties, said Southern Management will be creating a new market in the area because the closest upscale rental properties are in downtown Baltimore and Columbia. He expects the building - which could open in the middle of 2007 - to draw people working in the city or around Washington.

Rental prices haven't been set, but Hillman is looking at a range of $1,000 to about $2,400 for the apartments, which will probably include large studios and one-bedroom and two-bedroom units.

He prefers rentals but said the units could be sold instead if the market doesn't pan out. Average home prices in the 21043 and 21228 ZIP codes, which Oella straddles, rose 85 percent between 1999 and last year.

The mill was built in 1918 to replace a 19th-century textile plant destroyed by fire. It ceased to operate as a mill in 1972 and has been used by a potpourri of operations since, particularly art and antiques. In January, that, too, came to a close.

"It had a lot of charm," said Julie Wolfgang, a partner with P.J.'s Antiques, which rented space there for about 3 1/2 years. Her shop is one of eight former mill businesses that just moved to an Ellicott City building on St. Johns Lane after two months without a location.

The county has considered the mill a possible site for residential conversion for about a generation, but some Oella residents have opposed the idea because they fear the town's narrow, winding streets will not be able to handle the traffic.

Arnold F. "Pat" Keller III, Baltimore County's planning director, said he sees less potential for problems with apartments than with retail. "I really think it's a great fit," he said.

Whatever the use, Hillman believes this is a last-chance situation for the mill.

"If that building sat there another year or two in the condition it's in, I don't think it would be savable," he said.

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