‘A rejuvenation’

Adaptive reuse has become as common as new construction in New Haven, with old office buildings and mills being converted from their functionally obsolete status into much-needed rental units.

One example of that trend is the Mill River Apartments in New Haven.

“We’ve seen a lot of adaptive reuse in the past few years,” said Steve Witten, senior director of the National Multi Housing Group at Marcus & Millichap Investment Real Estate Services in New Haven. “This particular property happened to be in New Haven, but you’ll see it in Hartford, and all of the major cities in the state.”

Witten added that wherever you find functionally obsolete buildings, such as old mills or office spaces, there inevitably will be adaptive reuse projects.

“Office buildings are a prime example. As we came into the early 1990s there were a number of buildings in New Haven that were functionally obsolete because of ceiling heights, amenities and floor plates. There are probably five or six in New Haven that have been converted to residential use,” said Witten.

Mill buildings offer similar situations, with a handful in New Haven and others scattered throughout the state. Typically these were built around the turn of the century and were once productive facilities.

“Many times the business was simply shipped out of the area, but even though the mills closed down the locations were always decent,” said Witten. “Many of the mills have now been converted to charming residential spaces with high ceilings, exposed brick walls and wood floors.”

Witten, Victor Nolletti, and Gary Witten, all of Marcus & Millichap Investment Real Estate Services, were the sole brokers in the $2.55 million sale of the Mill River Apartments.

Steve Witten said the property is an excellent example of an adaptive reuse of a functionally obsolete mill building.

Located on 0.84 acres at 277 Chapel St., near the Wooster Square District and a short distance from Yale University, the property consists of 45 residential units in a converted, historic mill structure.

Originally constructed in 1917 and converted into residential condominiums in 1988, it was subsequently undeclared and renovated in 2002.

With water views of New Haven Harbor, the apartments in the converted mill building consist of 42 one-bedroom/one-bathroom units ranging between 582 and 975 square feet in size, one two-bedroom/two-bathroom garden unit totaling 1,090 square feet and two one-bedroom/one-and-a-half-bathroom townhouse units, each totaling 982 square feet.

The seller of the building was 277 Mill River Assoc. and the buyer was Mill River Holdings.

‘A Definite Need’

One of the benefits of adaptive reuse projects such as the Mill River Apartments is that the developers retain the structure. Instead of demolishing buildings that have become fixtures in the neighborhood, they are brought up to date and converted to more functional uses.

“This type of adaptive reuse keeps many people working in the community [who are] now living in the community. It’s fighting against the issue of urban sprawl by minimizing it,” Witten said.

He added, “Adaptive reuse makes a great deal of sense. Certainly in New Haven we’ve definitely taken advantage of the opportunity whenever available. We have roughly 500 to 600 units of additional housing units created in the last few years in functionally obsolete buildings that didn’t have to be torn down.”

The difference in cost between building new construction and adaptive reuse isn’t that large, but Witten said it’s enough to make developers think twice about building new.

“One of the problems with new construction is that with today’s costs you can really only afford to build luxury or A-quality rental units,” said Witten. “You really have to charge high rents to make your money back.”

Adaptive reuse allows developers to charge a lower rental structure because the cost of conversion is approximately two-thirds to one-half of the cost of new construction. Witten noted that on a per-unit basis, adaptive reuse costs about $60,000 to $75,000, while new construction costs roughly $130,000 to $150,000 per unit.

“There can be a dramatic difference between the two,” he said.

Another issue to consider is that older buildings often have very solid construction and will last for quite some time, according to Witten.

“Typically when buildings like this are done, such as a mill building, you’re taking open floor plates and carving them into units. Typically these buildings receive almost a gut rehab,” he said.

Some buildings may have historic designations that require developers to be careful with facades and other areas of the structure. The internal elements, however, are almost always completely redone.

“We give them all new mechanicals including plumbing, electric, HVAC systems, so pretty much what you have is a skeleton building,” said Witten. “And you know what they say: ‘they don’t make them like they used to.”

He added that often they are well-conceived buildings that will “clearly surpass the lifetime of new construction.”

Because the Mill River Apartments property – while a somewhat smaller property compared to other New Haven projects – is only a few blocks away from the Yale campus, Witten believes it will draw some student business.

“It was originally converted from a mill building into condominiums. Then the condo market softened and the building became undeclared and converted back to apartments,” he said. “Frankly, we’ve done five or six buildings like this, most of them considerably large, in and around downtown. Almost every one of them is [at] 100 percent occupancy.”

The thought that sometimes comes to mind is that with so many new apartments in the city, there might not need for another. Because of the university and the environment of young professionals in the city, however, there has been a strong desire for such rental housing in New Haven.

“There is a definite need for quality rental housing and the demand far outweighs the supply,” said Witten. “This is the kind of housing that I would live in if I were a college student.”

He also said that type of project doesn’t just have benefits to the building, but to the immediate community as well.

“These buildings are closed down and dark, and now there are lights on and people are moving around. It brings a rejuvenation to a particular block and helps bring the city back to life,” said Witten.