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Adaptive reuse brings charm and character, but not cost savings

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Eugene Diaz is well versed in the field of adaptive reuse — and, in turn, what's conducive and cost-effective about converting a large, historic industrial site to multifamily housing.

In fact, he can answer you in two words.

"Absolutely nothing," said Diaz, principal partner of Prism Capital Partners.

"People always ask the question, 'Is it cheaper?' The fact of the matter is, it costs more money."

But it's still a good thing. In fact, the developer has two such projects in its pipeline, with one nearing completion of its first phase and another on track to start this fall. Despite the costs and challenges, he said, "you end up with space that you otherwise could not build today," with features like concrete frames and 17-foot-high ceilings that evoke "New York-style" construction.

"You get a really great living environment, and that's one of the things that's really selling today," Diaz said. "Nobody wants plain vanilla. If you can deliver something that's extremely livable, that's got a uniqueness of character to it at the same relative rates, you're effectively delivering a better mousetrap."

By October, Prism will open the first of 365 apartments at Parkway Lofts, in Bloomfield, at the former General Electric warehouse that looms over the Garden State Parkway. Diaz also hopes to have broken ground by then on Edison Village, a 610-unit redevelopment of Thomas Edison's historic storage battery factory in West Orange.

The two projects cost $90 million and $230 million, respectively, calling for a balance of modernization and preservation. In Bloomfield, the former warehouse boasts 18-inch-thick concrete floors, but meeting current building codes requires everything from new windows, acoustical breaks and high-efficiency mechanical systems, Diaz said.

Prism also spent $2.5 million to restore the façade of the GE building, he said, proving that being old "doesn't mean dysfunction, necessarily."

Other developers have had similar results in recent years, especially in urban markets with rich industrial histories. In Jersey City, firms have renovated the former Dixon Ticonderoga pencil factory and the American Can Co. building into condominiums.

Financing such projects can be challenging, as they "tend to be in a transitional market," said John Hatch, an architect in the redevelopment of the former John Roebling complex in Trenton, which was a production hub for wire rope. That means "if we can get the price to be right, we can attract that demographic that's looking for that kind of environment," while capitalizing on locations close to mass transit and other amenities.

The buildings also are adaptable to a mix of uses — "if you can get to them before they're in really bad shape," said Hatch, a principal with Clarke Caton Hintz, in Trenton. "And you can really take advantage of the character of the building to make these amazing spaces that would be a lot more difficult and a lot more expensive if you were building new."

E-mail to: joshb@njbiz.com
On Twitter: @joshburdnj

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