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Finding the Value in Adaptive Reuse of Historic Buildings

Owners and developers of historic buildings call D &F when they need a partner they can take to the bank for redevelopment projects. In fact, D&F has literally “gone to the bank” on two large projects in downtown Richmond, VA, proving the value in adaptive reuse of historic buildings.

First National Bank Building

The first is the $30-million, 154-unit rehabilitation of the former First National Bank building at 823 E. Main St.The iconic building, built in 1913, and, at 19 stories, was the first skyscraper in the capital city. It represented turn-of-the-century Neoclassical Revival architecture and was a landmark in downtown Richmond.

The building is on the National Register of Historic Places, which means there are strict codes regulating changes that can be made to the building. With the team of Commonwealth Architects from Richmond, HITT Construction from Northern Virginia and Drucker & Falk serving as advisers and property managers, the build-out and lease-up was a huge success. The certificate of occupancy was granted on Dec. 23, 2013 and the building was full nine months later.

Central National Bank Building

The second bank rehab project for D&F, Deco at CNB, the iconic former Central National Bank Building, is located at 219 E. Broad Street. It includes 112 units in its 152,000-square-foot, 23-story tower and 88 units in the 8,000 square foot annex. To date 36 units of the 200 units are leased.This $39-million renovation is one of the largest residential rehabs in state history.

Key to Successful Redevelopment Projects

Because of the success of these projects and other adaptive reuse work, Drucker & Falk has developed a reputation for excellent historic rehabilitation. Director of Multifamily Management Andrew Chisholm, CPM, advises owners interested in adaptive reuse project like these.

Chisholm says the key to a successful redevelopment project such as this to embrace the history of the building while allowing for modern efficiencies. “You can’t just renovate it historically and hope that everyone appreciates that it’s old. You need to integrate the modernization and the historical significance together. So the beauty of this building is that you’ve got an historical shell and a lot of historical finishes, however the apartments themselves are brand new with all the modern efficiencies that you would find in an apartment community that was built straight out of the ground.

While acknowledging that rehab projects such as this can be expensive when compared to new construction, Chisholm says there are advantages. “You can get some historical tax credits to help with the costs.” In both bank projects Drucker & Falk manage, developers were able to use federal and state tax credits to offset the otherwise prohibitive cost of repurposing outdated, neglected and deteriorating buildings.

“Also, if you are able to capture higher rents and you get the appreciation from individuals who enjoy the historical ambiance while enjoying the modern amenities, it can work out quite well,” says Chisholm. “Land is a premium in these downtown areas, and you don’t always have the option to build from scratch. If you don’t consider rehab projects, you’re missing out on that resident who wants the downtown lifestyle.”

Chisolm says Drucker & Falk were pioneers in this submarket area in the downtown Richmond market, but now there are others doing similar work in the area. “Historic buildings are tough projects, but when a project is done, you’re so proud. Each one has its own quirks. You can take advantage of those quirks if you know how to promote them.

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