Residential infusion sparks transformation of downtown St. Louis' character | St. Louis Public Radio

Residential infusion sparks transformation of downtown St. Louis' character

Jun 24, 2013

This article first appeared in the St. Louis Beacon: Zack Boyers remembers when somebody could organize an 11-on-11 soccer game on Washington Avenue’s streets – and not have to move out of the way.

In an interview with the Beacon on the second floor of the Fashion Square Lofts, Boyers – the CEO of U.S. Bancorp Community Development Corp. – said that “nothing was going on” in downtown residential development in 1997 when he arrived in St. Louis.

But when banks started financing some residential loft buildings, it created a domino effect, he said.

“We were able to finance the first couple of market-rate residential loft buildings downtown,” Boyers said. “And that was so exciting to me – and in some ways scary for the bank – that we said, ‘Oh, if we’re going to make these things work, we may need to do the buildings next door or across the street if this is going to be sustainable.’”

Zack Boyers
Credit Proivded by Mr. Boyers

Indeed, many point to the transformation of old warehouses and industrial facilities on Washington Avenue as a turning point for downtown’s development. Many buildings that were once abandoned are now chic residential complexes. That includes, but is not limited to, redevelopment projects such as the $20.8 million Fashion Square Lofts, the $22.49 million Lucas Lofts and the $24.46 million Bankers Lofts.

As the number of residents has increased, so has the number of businesses focused on residents – the Culinaria supermarket, a movie theater and scores of chic restaurants. Downtown's growth in residents is one of the biggest success stories recounted by downtown boosters.

Residential development has had its ups and down. The housing collapse stopped many condo conversions, shifting the units to rental properties. It also forestalled construction of new buildings.

Still, downtown's transformation over the past decade has impressed many. Michael Allen, director of the Preservation Research Office, said there “seems to be no end to the interest in living downtown.”

Allen said the days of the area being primarily a commercial center are coming to an end. And that, he said, may not be a bad thing.

“The real definition of a downtown historically has been the center of commercial activity. I don’t think downtown St. Louis will be that for much longer. I don’t think that’s necessarily a problem in terms of preservation or sense of street life. Spots of activity will be downtown,” Allen said. “And it will make it even livelier because these are people who are going to be home in the evenings and at night and on the weekend who are taking walks and looking for a place to eat and shop.”

“The more people who live down there, the more of a true 24/7 kind of neighborhood its going to become,” he added.

Residential surge

Frank De Graaf wanted to be part of downtown's emergence as a neighborhood from the moment he first saw construction on Washington Avenue.

De Graaf – a former airline pilot and current business consultant – lived in the Central West End in the early 2000s during his first stint of living in St. Louis. Even before it was fully developed, De Graaf saw immense promise when he drove through downtown and saw construction on Washington Avenue.

“All the lofts were still empty and I was like ‘this is unbelievable. Washington Avenue’s such a beautiful street. All the warehouses. This has so much potential,’” De Graaf said.

“And I was like ‘I want to live here. I want to be part of this renaissance. I want to be a pioneer,’” he added.

Unfortunately for De Graaf, he didn’t become that “pioneer” right away. His job took him to other parts of the country for a few years. But when he returned to St. Louis in the mid-2000s, he snatched up space at Fashion Square Lofts and has lived downtown since. De Graaf now writes a blog chronicling the development of the area.

“It’s come a long way,” De Graaf said. “Even Washington Avenue six years ago wasn’t half as busy it is today. You see that on Locust Street now, you see that in the Central Business District. It’s come a long way. And I think the amazing thing is (that) most of it -- especially in the last three years with the real estate crisis and the banking crisis -- it didn’t really stop.”

The numbers

The city's neighborhood boundaries of downtown are the Mississippi River on the east, Chouteau Avenue on the south, Tucker Boulevard on the west, and Cole Street on the north. Downtown West is bounded by Tucker Boulevard on the east, Cole Street to the north, Jefferson Avenue to the west, and Chouteau Avenue on the south.

According to the U.S. Census, as a neighborhood, Downtown's population went to 3,721 in 2010 from 806 in 2000. That's a 361.66 percent increase. Downtown West's population went  to 3,940 in 2010 from 2,204 in 2000, which amounts to a 78.77 percent increase.

But differing boundaries make talking about numbers confusing. Kevin Farrell, senior director of economic and housing development for Partnership for Downtown St. Louis, told the Beacon that his group includes Columbus Square and Carr Square when calculating downtown’s population.

Using that configuration, the partnerships says downtown's population is close to 14,000 – with no signs of slowing down. He said that roughly 500 new residents have moved downtown every year for the past five years. 

“Residential is what gives that 24/7 feel,” said Farrell earlier this month at the group’s headquarters in the Laclede Gas Building. “It provides real stability, sustainability. It helps to attract retail. It allows people to work close to where they live. And it creates a market for residential services. All downtowns have really tried to build their downtown residential base. And it continues to be critical in terms of how we look ahead.”

Some residual impact of the residential surge is apparent: The last few years, for instance, brought the Culinaria grocery store, a movie theater and dozens of bars and restaurants to downtown. 

Barbara Geisman -- whose key roles in development included heading the St. Louis Community Development Agency and serving as deputy mayor for development for Mayor Francis Slay -- said those types of attractions cater to a wide range of people.

"You’ve got to have a grocery store to make people believe that you’re a real residential environment. And the movie theater is kind of the same way. It’s attractive to the workers because they can go to a movie after work. It’s attractive to the people who come to the convention center. But it’s also attractive to residents. And that attractiveness is enhanced by a sort of uniqueness. It’s not just your mother’s movie theater,"said Geisman, who left city government in 2010 to enroll in Washington University Law School.

Those types of amenities, she said, also entice another important downtown constituency: conventiongoers. "Most of the people who come here for these conventions spend a lot of time on Washington Avenue. I live on Washington Avenue. I see them walking up and down the street all the time," she said. "It’s an advantage to the convention and tourism industry in two ways. No. 1, in 2001 we had 70 vacant buildings sitting around downtown. If you’re coming here for a convention and you see all that, you’re not as inclined to come here for the convention.

"By transforming all that into attraction, you turn a liability into an asset," she added.

From dust to gold

Boyers says many of the buildings on Washington Avenue had been built in an "incredible" way but needed a lot of repair.

"And one of the biggest challenges in these large or very large buildings is making sure that people not only get sort of industrial spaces that they want, but that they get light because they shoot back into the middle of these vast, vast buildings," he said. "So from a construction and development perspective, that’s a challenge."

An even bigger challenge, Boyers said, was putting deals together. And one particularly potent tool, he added, was the historic preservation tax credit, a state incentive that he said drove down the costs of development for some of downtown’s buildings.

According to data provided to the Beacon by the Department of Economic Development, 35 historic tax credits were issued since 1998 for properties up to the 1600 block of Washington Avenue, for a total of $82,909,449.89. The total rehab costs for these properties came to $331,637,799.52.

Those types of incentives, he said, made residential spaces more affordable.

You build the financing, he said so "that the rents, the costs or whatever are attractive enough that the earliest pioneers say ‘that’s a great deal and a cool place and I want to do it.” Boyers said the underwriting work for one of the first deals he remembered was as simple as the belief that "in a region of 2.5 million people, surely 13 people will want to rent lofts down here.”

Focusing attention on Washington Avenue, said Pulaski Bank President Tom Reeves, turned out to be a “key turning point” for developing other parts of downtown.

“It started the critical mass of development,” Reeves said. “You could take a lot of money and sprinkle it downtown back then. And you’d never know it was there. The key here was to concentrate it in a very strategic way. And Washington Avenue was a key thoroughfare. It had amazing architecture and tremendous buildings that will last for a long time.”

Especially important, he said, was improving the surrounding infrastructure – such as streetlamps and sidewalks – to lay a foundation to rehab what used to be factories and warehouses.

“You had to really create an environment where people were comfortable developing and investing,” Reeves said. “Where lenders were very comfortable lending money. Because this was obviously going to be a 10- or 15- or 20-year process. It happens slowly. And to do that, Washington Avenue really did create this sense of place where everybody could then attach to it and feel comfortable that the city was behind it and that big corporate players were behind it.

“It wasn’t just this scattered attempt to move things forward,” he added.

Economic curve ball

Downtown development wasn't spared by the 2008 economic collapse.

"The big bummer for downtown was the big credit crash in 2008," Geisman said. "I think we were moving toward a point where downtown could be self-sufficient. And that set us back a while. I think we’re starting to come out of it now. Had the national economy not had all these issues, I think we’d be better place than we are today."

For one thing, the economic crisis put a major strain on downtown's real estate market for businesses and residents.

"It was that much harder to get loans for anything because the banks were skittish about getting yelled at, for lack of a better term," Geisman said. "But then particularly on the condominium side was the whole single-family, owner-occupied mortgage crisis. A lot of these buildings had been designed and built as condominiums when people’s values were going down – combined with the fact that it became really, really hard to get a condominium or single-family mortgage."

One saving grace was the fact that many condos could be converted to rental units -- which wasn't the case in hard-hit communities around the metro area.

"It’s hard to rent a bunch of houses out in St. Charles," she said. "But (downtown units) were fairly readily converted to temporary rentals. So we kind of weathered that. ... It would have nice to have all the people be owner-occupants. But the fact that they were occupied by renters is far better than having all those units be vacant."

“In the long term, you want to see a healthy percentage of owners,” Boyers said. “That stabilizes a neighborhood; it creates solid stakeholders. So I think you will see, and you want to see, a percentage of projects being more driven around homeownership.”

De Graaf said that many of the residential buildings downtown are reaching capacity. And he looks for a change in direction.

“Not everybody wants to live in a loft,” he said. “They want to live in a brand new building. And I think we’re going to see some new buildings pop up in the next five to 10 years.”

Geisman also said new construction is needed downtown, adding "we need to add the menu of what we have to offer businesses and residents from both a physical and aesthetic standpoint, but also a functional standpoint."

"We need some quality new construction that again is going to complement the historic buildings," she said. "One of the things that makes urban areas exciting is the juxtaposition of historic and cutting edge volume. If you kind of keep the change going, that in itself is an attraction." 

Attractive attractions

Downtown's residential feel could also spur the office economy.

Geisman told the Beacon that downtown "has the potential to have attributes that can stand on its own if we could solve what businesses perceive as the problem."

In several instances, she said, law firms housed downtown were considering bolting to Clayton. The city, she said, worked to "convince them that downtown had potential and we could do something to turn that potential into an improvement of downtown’s condition."

Downtown’s future

The announcement that Macy’s will close its downtown store is a marker for change. The shopping one finds downtown now is primarily of the boutique variety. The district that led to the second half of the “First in booze, first in shoes …” mantra for the city finds lofts not wingtips in the old warehouses.

Who lives downtown? What businesses are growing? Has the area passed the tipping point, or is its rebirth still fragile? Reporter Jason Rosenbaum looks at these and other questions.

One attractive element, she said, was a vibrant environment for younger workers -- individuals, she noted, who like to walk to a Cardinals game or go to a variety of eateries after 5 o'clock.

"A lot of businesses are beginning to understand that their pool of younger workers would much rather be in an urban environment where they can walk to the ballpark, walk to 15 different restaurants and have a sense of excitement when they walk out of the door of their office building than be in an office out in Chesterfield," Geisman said.

Farrell went onto say that some office space is being converted for residential use – which he said could organically lure businesses to locate downtown.

“Early on, the residential conversion of buildings was sort of warehouses and industrial spaces that would be along Washington Avenue,” said Farrell. But pointing to the Park Pacific Building as one example "I think you’re seeing older and even mid-20th century office buildings that are beginning to be converted. And it’s good not only because it gives us inventory for residential, but it eliminates excess inventory on the office side.”

He said that more young, educated people to downtown. means "we’ll start to attract more and more of the jobs that rely on those folks to provide talent for the growth of the company.”

Reeves agreed, saying You’re talking about creative companies. You’re talking about a whole variety of businesses and residents that really want a more urban lifestyle."

"I think momentum will continue forward, because the roots are now firmly established," he added. "As people look at these buildings that still need development, they’re seeing some really unique opportunities that aren’t available any place else. The Chemical Building’s got some interest. The Arcade Building, too. The MX is well underway."