Editor’s note: In this three-part special report, Inman News examines the challenges and rewards of pursuing property conversions in today’s market, a case study of conversion-frenzy-gone-wrong, and marketing techniques developers and agents use to sell these properties. (Read Part 1, “Changing building’s use presents challenges and rewards,” and Part 2, “Speculation in condo conversions: South Florida’s cautionary tale.”)
“Historic.” “Authentic.” “Grand.” “Elegant.”
Adjectives such as these are common in the marketing of conversion projects, which swim upstream against the tide of demand for newly constructed buildings. Marketers often refer to a property’s past history as, for example, a jewel in a turn-of-the-century industrialist’s crown, selling history as well as space.
History is only one selling point for conversions, which may have to battle preconceptions of such buildings being drafty, or of uncertain condition, or in bad neighborhoods. Indeed, each of these can reasonably be seen — and marketed — as positives. So large rooms have “loft”; condition is “time-tested”; and potential buyers have the opportunity to be “pioneers in the city’s newest neighborhood.” While such terms may seem slippery, they do point out the sometimes-overlooked benefits of conversions, even as they battle negative prejudices.
Conversion projects often have natural physical advantages, as large-scale construction elements designed for public gatherings end up in smaller, subdivided spaces. A. Boyd Simpson, president of the Atlanta-based Simpson Organization, described how he’s integrating such features with modern technology in his downtown Charleston, S.C., mixed-use development.
“The Cigar Factory is a magnificent example of Victorian architecture, with wonderful windows that over time were bricked up. We’re going to open them up again in an architecturally correct way, but they’ll be more energy-efficient and hurricane-resistant. The place has great ceiling heights, terrific volume, nice proportions. It’s a dramatically attractive building, given that it was built to be a manufacturing plant.”
Another of Simpson’s buildings is The Georgian in Athens, Ga., a residence marketed to the local university population. Its Web site — tellingly, with the domain “historicgeorgian.com” — touts not its scale, but its history. “The Property … was the first hotel in the state to have an air-conditioned restaurant, the first to offer direct dial telephones in guest rooms, and the first to meet fire safety codes imposed statewide after the tragic Winecoff Hotel fire in Atlanta … This is your chance to own a part of Athens’ history!”
Meanwhile, Simpson intends to market The Cigar Factory partly through the fact that “We Shall Overcome” was first used as a protest song during a strike at that property.
These examples show how existing buildings are time capsules of both old-world architecture and social movements, carried into the present day. Old-time economies are also evident in ways that redound to converters’ benefits when compared to new construction. Elise Johnson-Schmidt, preservation architect of Johnson-Schmidt and Associates, explains: “Construction costs today are around 50 percent for labor and 50 percent for materials. One hundred years ago, materials were more expensive, while the cost of labor was much lower. So they could create all these beautiful spaces with hand-worked details. We don’t do that today — such work requires a great deal of expensive labor. When you convert an existing building, you can capitalize on all that great old detail. To try and duplicate those kinds of spaces today would just not be affordable.”
On the other hand, not every conversion is historic or architecturally brilliant. In those cases, price may be the marketable point. In describing apartment-to-condo conversions, Jack McCabe, of McCabe Research & Consulting, said, “Public perception of (such) conversions is that they’re older, existing buildings, and therefore should be of lower price. It may be that they have older architectural style or obsolete floor plans. But they’re definitely more affordable, and in some places have become first purchases. I’ve joked that here (in South Florida), the American dream isn’t a single-family residence, but a condo conversion.”
Conversions that are pioneers in a given neighborhood present a difficult marketing challenge: How do you convince future tenants or buyers that the area will become more than its formerly rough or abandoned zone? Buffalo’s CityView Properties found an inventive answer for its Larkin at Exchange building, a conversion from warehouse to offices: An authentic London cab, the “Larkin Taxi,” makes continuous trips between the building and downtown Niagara Square two miles away, for a cost of $3 a ride. The cab has attracted local attention as “iconic and stylish,” obliquely emphasizing the historic character of the development.
One marketing solution to the “Will it rent?” question is to enter a space with an existing anchor tenant — even if that tenant is yourself. Such was the case for Savarino Cos., which occupies half of a 20,000-square-foot conversion in Buffalo. Another approach is seen in Artspace, a national nonprofit organization that markets its rental conversions to local artists’ communities, finding much success through word of mouth and arts organizations. For Artspace, that means designing the space with amenities artists will appreciate, says Vice President of Consulting and Resource Development Wendy Holmes. “Northern exposure, high ceilings, lots of natural light, and open spaces with few columns” are valued in buildings it acquires, typically subdividing them into large, live/work-capable units in mixed-use developments that include such arts-friendly businesses as galleries and jazz clubs.
Finally, unusual features of a building’s old use can sometimes be highlighted as quirky attractions. College Street Station, targeted for condos, started life as a school building — a fact developer Northbrooke Homes’ President Gus Pounds exploited in a press release. “All of the lofts at College Street Station incorporate many of the original details of the school’s classroom, such as original hardwood floors, exposed brick walls, and chalkboards.”
What prospective buyer wouldn’t want a wall of chalkboards for the kids to write on? That, in a nutshell, is the world of conversions: finding new value in old castaways.
Tom Geller is a freelance writer in San Francisco.
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