Turning vacant space into apartment space

Conversion: Baltimore Main Streets wants to fill upper floors of retail buildings with people.

July 31, 2005|By Lynn Marie Honeywill | Lynn Marie Honeywill,SPECIAL TO THE SUN

In Baltimore commercial districts, it's not uncommon to see old buildings busy with retail and restaurants at the street level with upper stories that have been vacant for years.

Baltimore Main Streets wants to persuade property owners to convert these upper floors into profitable apartment space, said Mary Pat Fannon, director of the city program, part of the Baltimore Development Corp.

In some of the trendier city Main Streets neighborhoods, such as Fells Point, Federal Hill and Hampden, the demand for residential rentals is driving up rent prices.

A two-bedroom Federal Hill apartment in a desirable area is likely to rent from at least $1,200 to $1,600, above a shop or not, Fannon said. Fells Point apartments, including those above shops, also fall along that price range, said Fran Dugan, a Realtor with Long & Foster Real Estate Inc.'s Fells Point office.

Graham Summers, 24, who lives above the clothing store, Oh! Said Rose, in a rowhouse on Hampden's 36th Street, called The Avenue, is familiar with the demand-driven swell in rent prices. His one-bedroom apartment rents for $700, but the next tenant will pay $800, he said.

A lead singer in the band Jayakar, Summers plans to move in August to save money. Yet Summers acknowledged that he's grown fond of the soothing "muffled techno beeps coming through the floor" from the store below. And he's developed a serious addiction to the sweets at Rose's Cookies next door.

Renovations an issue

Although renting upper stories might bring rewarding rents, building owners who convert vacant upper floors into apartments can face costly renovations to bring a building into compliance with fire and building codes, according to a Baltimore Main Streets study.

Compliance may involve installing sprinkler systems and firewalls between apartments and any restaurants below them, in addition to requirements such as lead-paint abatement. The study, prepared by Columbia-based Lipman Frizzell & Mitchell LLC, offers advice on how to develop vacant second floors in historic neighborhood retail districts, including the use of federal and state historic tax credits for financing.

In some buildings, it's necessary to build additional exits for upper-story apartments, because apartment tenants cannot leave through a store's front door like the shopkeepers who once lived there, said Fannon. Fire codes also might require extra exits depending on building height.

Scarce parking space is another issue.

"When you live in a commercial district, there are already parking pressures," said Fannon. "It's a little exasperating when you live in a bar and restaurant district." But urban renters who want to live in these areas "are still going to find a parking place," she said.

In 1995, Fannon rented an apartment above a retail outlet, a tanning salon in O'Donnell Square in Canton.

"I thought it was fun to have all the activity all around you," Fannon said. "You could just walk out and go to the dry cleaners, the coffee shop, the bank, the gym, the church. You could park your car for an entire weekend and never have to move it."

`Dead space' no benefit

Despite the challenges of developing upper floors, leaving them as "dead space" doesn't benefit anyone, said Chris Regan, a principal in Tower Hill Development LLC.

"I think people are creating a real disservice to the community when they don't utilize the upper space at all," Regan said.

In the city's urban core, Tower Hill recently renovated a larger-scale mid-19th-century building at 313 N. Charles St. for the street-level restaurant Copra. Rather than putting in office space on the upper stories during the $1 million renovation, Tower developed two 2,000- square-foot apartments renting for $1,600 and $1,900 monthly.

"The residential market is strong, and the office market is weak," said Regan, a minority owner in Copra, which opened last year.

Riccardo Bosio, owner of the Sotto Sopra restaurant at 405 N. Charles St., said five newly renovated apartments on his building's upper three floors leased for about $750 a month five years ago. Now the one-bedroom, 2,000-square-foot apartments quickly rent for $1,100, he said.

Urban renters are drawn to the walking-distance proximity to downtown restaurants, shopping and cultural amenities such as the Hippodrome Theatre, Inner Harbor and Oriole Park at Camden Yards, said Kemp Byrnes, president of Byrnes & Associates Inc., a commercial real estate brokerage.

"There's an energy downtown," said Byrnes. "It's the way life was meant to be."

In a $3 million renovation assisted by historic tax credits, Byrnes and five other investors recently finished converting the upper floors of the long-vacant McDowell and Co. building at 339 N. Charles St. into 13 loft apartments. All but one of the 99-year-old building's apartments is leased, at rents ranging from $1,150 for a 750-square-foot one-bedroom to $1,750 for a 1,180-square-foot, two-bedroom apartment.

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