A developer plans to transform the vacant Raffel Building warehouse south of Federal Hill into 60 upscale apartments, hoping to pull the popularity of the neighborhood south.
Poverni Ventures LLC and Management Restoration Services LLC, Poverni's general contractor and partner in the project, aim to start construction on the 70,000-square-foot building in May, said principal Eugene Poverni.
Their 111 Heath Lofts LLC purchased the 111 W. Heath Street property, which had been targeted previously for conversion to condominiums, in December for $1.05 million.
Poverni, a 27-year-old Pikesville High graduate and attorney who started in real estate in 2009, said he believes the conversion will help revitalize that part of the neighborhood, which sits west of Hanover Street close to the railroad tracks.
"The reason why this piece of Federal Hill has been stagnant, at least in our opinion, has been because there's this big, empty building sitting there," he said. "Once we get this building built and leased, that's going to change this perception about the wrong side of Hanover Street."
The Heath Street project, which will be pitched to young professionals, follows a spate of new apartments in South Baltimore, including developments at 1901 South Charles Street and 101 Wells Street.
The market remains strong: the vacancy rate for apartments in Baltimore was 3.7 percent at the end of 2013, below the 4.1 percent national average and ranked 33 of 79 metro markets in the country, according to a preliminaryreport by real estate research firm Reis Inc.
"South Baltimore is a very desirable part of Baltimore and everyone wants to live here," said South Baltimore Neighborhood Association President Morgan Alcalay, 24, a Navy lieutenant recently returned from Afghanistan. "In general there's hundreds of millions of dollars in development going on in the peninsula, so I'm not surprised that developers are looking at every available piece of property."
Alcalay said with the influx of residents, parking is an ongoing concern in the neighborhood. Other developers have built more than the necessary number of spaces, he said.
"Being able to work with developers like that we really appreciate," he said.
Plans for the Heath Street apartments include a parking garage, roofdeck, and gym and call for mostly one bedroom units. The building's historic nature means there will be 30 different floorplans, Poverni said.
"It might be a pain in the butt from a development standpoint, but it's going to be really nifty for the residents," he said.
The 1911 building, located at 107-115 W. Heath Street at the corner with Clarkson, once housed J.M. Raffel Co., a cardboard box company. It last sold in 2005 for $2.1 million for a condominium project that collapsed. In 2011, under the previous developer, the project received about $350,000 from the state via the Sustainable Communities Tax Credit program.
Poverni said he is having discussions about whether that credit can be used for his project, expected to cost between $9 and $12 million. He also plans to apply for federal historic tax credits, which could cover about 20 percent of the cost.
The building's location makes it ineligible for some city incentives for apartment conversions, but it can make use of a city tax credit for historic preservation.
This is the one of the largest projects yet for Poverni Ventures, which has worked previously on rehabilitations in areas such as Old Goucher and Mount Vernon. The company plans to manage and lease the Heath Street property for the foreseeable future, Poverni said.
The developers are meeting with the board of the South Baltimore Neighborhood Association tonight and will go before the city's zoning board in the next few weeks, Poverni said. The project is expected to be completed in 2015.
"I'm not familiar with the project, but I can tell you that any conversion of any abandoned building in this neighborhood would be a good thing," said Melanie Ambridge, past secretary of the South Baltimore Neighborhood Association. Ambridge, who lives on Hanover Street, said she is concerned that potential tenants will be deterred by the loud, steady horns of passing trains, but hopes the project will be successful.
"I just don't know who could live next to that, but I wish them the best of luck and I hope it's very successful," she said. "I love the fact that that part of the neighborhood is getting built up."Copyright © 2014, The Baltimore Sun