ST. LOUIS — The developer behind the planned rehabilitation of the Butler Brothers building has closed financing for the $130 million project, allowing construction to begin on one of the largest vacant buildings downtown.
“We pulled the permit and we are mobilizing this week,” said Gary Prosterman, president and CEO of Memphis, Tennessee, Development Services Group. “Everything is in order to continue.”
The project will convert the 1906 structure originally built for a turn-of-the-century wholesaler into 384 apartments, with 400 underground parking spaces, space for a restaurant at street level and possibly a second restaurant or bar with access on the roof. Just two blocks from the under-construction Major League Soccer stadium, around half of the apartments are expected to open by next summer, while the rest will be completed in early 2024.
Formerly the distribution warehouse of the Ben Franklin chain of stores before its bankruptcy in 1996, the Butler Brothers building sat virtually unused for the better part of 20 years. Its massive size — it spans an entire city block at Olive and 17th Streets — made it both a daunting project and a building city leaders knew would be key to downtown redevelopment.
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“It really should be what we call a catalyst project, in its scale and in the fact that you have 380 residents coming to this area with good jobs, with money to spend,” Prosterman said. “Activity begets more activity.”
Prosterman’s company bought the building a year ago for $6 million, its first foray into the St. Louis market aided by a loan from Greater St. Louis Inc.’s real estate arm to cover part acquisition financing. Development Services Group has brought with it years of experience in rehabilitating large historic structures in other cities, complicated projects that often raise unforeseen structural obstacles.
“We have a very experienced team in doing these big adaptive reuse projects,” Prosterman said. “But we’ve never finished one without finding a lot of surprises.”
He said the company designed the apartments knowing that many people were now doing part of their working week from home, adding office “corners” in the units as well as communal workspaces.
Approximately $24 million in historic Missouri tax credits, allocated to a previous owner and available for use on the project, plus an additional $18 million in federal historic tax credits fill the funding gap.
Bank of America is leading construction finance, with Meta Real Estate Partners serving as junior construction lender.
“We are proud to work with DSG to revitalize this iconic downtown west building, further demonstrating our commitment to St. Louis,” Marilyn Bush, president of Bank of America St. Louis, said in a statement.
Park Corp. is the general contractor for the project and Trivers is the architect.
About 25% of the units will be designated as “workforce housing,” charging rents deemed affordable for those earning between 80% and 120% of the region’s median income – which equates to between $1,200 and $1,800 per month. This stipulation was required as part of a negotiated agreement with the city in exchange for a 15-year property tax abatement.
Prosterman said there was a “learning curve” during negotiations with the city, which saw a transition to mayor and a change in leadership at the St. Louis Development Corp. while working on the project.
“But everyone worked patiently and diligently on both sides to come up with something,” he said. “I think the city recognizes that this is a massive building in a strategic location. It just has to happen.