Sioux City sees surging interest in downtown living

SIOUX CITY, Iowa (AP) - From his living room, Charlie Cowell can look out the window and see his office at City Hall.

Cowell, 26, moved last May into a one-bedroom condo in the historic Williges Building at 713 Pierce St.

"I'm not a big fan of commuting," Cowell, a city planner, told the Sioux City Journal (http://bit.ly/1zyMVld ). "I like to walk and it's next to my work."

How close? By cutting through an alley, it's a jaunt of 40 yards.

The top floor of the three-story Willeges was converted into seven upscale lofts with such amenities as granite counter-tops and hardwood floors. Priced between $104,000 and $152,900 depending on the size, the units sold out within six or seven months of completion.

The 1917 Willeges Building - originally a fur factory and later a women's clothing store - was saved from the wrecking ball in 2007 by developer Bart Connelly. The lower two floors had previously been converted into offices for a law firm and other tenants.

The Willeges was the latest mixed-use rehabilitation project that Connelly has completed downtown in recent years.

Nearly all the condos and lofts in the two most recent rehabbed buildings - the United Center, a turn-of-the-century six-story warehouse at 302 Jones St., and the 4th & Jackson, a 1970s-era, six-story office building at 700 Fourth St. - have been sold or leased and remain full.

With a growing number of prospective homebuyers, from young professionals to empty nesters, opting for downtown living, developers are moving to fix up additional spaces in the central business district.

"I think there's definitely more demand," said United Commercial President Chris Bogenrief, who helped market the Connelly projects. "It's just finding the right properties with the right parking and being able to get them cheap enough to make it work."

A broadening of state tax breaks for rehabbed housing has given developers an added incentive to build more units. So too has been a tight metro area rental market, driven by the arrival of hundreds of temporary construction workers assigned to the ongoing massive expansion at CF Industries' fertilizer complex at Port Neal.

A massive rewrite of decades-old city zoning codes also will promote rehabbing buildings to add more housing units, according to city officials.

At least two adaptive reuse housing projects are in various stages of development downtown, with some others under consideration.

- Local developer and business owner Rick Bertrand is building six market-rate apartments above McCarthy & Bailey's Irish Pub at 423 Pearl St. Scheduled to open in the spring, the units - with 1,000 square feet of living space, two bedrooms and two baths - will rent for $850 monthly, he said.

Bertrand and a partner opened the Irish pub in 2011. The two-story 1917 structure is one of a series of run-down buildings in the 400 and 500 blocks of Pearl that Bertrand's development company acquired, turning the bottom floors into bars, restaurants, retail shops and offices.

- Just up the street, a Vermillon, S.D. developer, Matt Mullen, is putting together a similar market-rate apartment project. He struck a deal with Bertrand for the structure at 510 Pearl St., known as the Malone Building.

- Ho-Chunk Inc., the Winnebago Tribe of Nebraska's economic development corporation, has hired an architect to lay out a floor plan to convert a former pet food factory at 101 Virginia St. into upscale condominiums or apartments.

- The new owner of the Insurance Exchange Building is studying whether to convert the top three or four floors of the six-story office building at 507 Seventh St. into market-rate apartments.

Brad Cummings, an Orchard, Nebraska, developer, has moved the building's commercial tenants to the bottom two floors to prepare for the potential housing rehab project. While he is confident the market is strong enough to rent all the units, the projected cost of all the improvements needed to meet modern building codes, such as installing a sprinkler system and another stairwell, has given him pause.

"The costs are getting elevated to the point where I don't know how feasible it's going to be," said Cummings, who added he expects to make a final decision later this spring.

Adaptive reuse has been used extensively to revive former commercial and office structures in Chicago, Philadelphia and Los Angeles, often fueled by city-sponsored incentive packages to encourage development.

In a 2011 study of Sioux City, a team of experts that analyzed the strengths and weaknesses of downtown identified adaptive reuse housing projects as the best bet for filling a glut of vacant office space in aging high-rises like the Insurance Exchange.

Ritch LeGrand, who owns another such building, the Orpheum Electric at Sixth and Pierce streets, said the Orpheum and other L-shaped downtown buildings dating to the 1920s and 1930s are not well configured for the open square or rectangular floor plans favored by modern office users.

While much of the past focus has been on high-rises, Bertrand said he anticipates more housing conversion projects in structures with as few as two stories, like McCarthy & Bailey's Irish Pub.

A new state law that took effect Jan. 1 reduces from three to two the minimum number of adjoining housing units a developer in a designated enterprise zone like the one in downtown Sioux City must build to qualify for an income tax credit of up to 10 percent.

In some smaller buildings, there's simply not enough space to carve out more than two units, said Bertrand, who also represents Sioux City in the state Senate.

"I think these type of tax credits will help spawn development," he said. "It lets the small developer in."

An overhaul of the city zoning codes nearing completion aims to encourage more downtown mixed-use commercial projects like the Williges Building, as well as expand adaptive housing to other parts of the city, said Jeff Hanson, the city's community development operations manager.

"We're trying to attract a younger generation and bring more of our younger generation back home to Sioux City," Hanson said. "Those that are coming back here are demanding more of that mixed-use residential."

Cowell saved for nine months to buy his one-bedroom condo in the Williges. He accepted his job with the city in July 2013 after finishing his master's degree at the University of Iowa. He said he enjoys living close not only to his workplace, but also to a large number of restaurants and night clubs for socializing.

"I've made a lot of friends since I moved in," he said.

Close proximity to downtown entertainment has been a drawing card for all ages, including empty nesters like Jim and Ginger France. The couple purchased a three-bedroom, three-bath condo on the fifth floor of the 4th & Jackson Building two years ago.

The Frances quickly struck up friendships with other residents of the building, which has 18 lofts on the top three floors.

Worry-free living also has been a plus for the couple.

"It's just so nice to walk out and shut the doors and know things are going to be taken care of," France said. "You don't have to call somebody to water the flowers or mow the lawn."

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Information from: Sioux City Journal, http://www.siouxcityjournal.com