In the world of downtown Baltimore residential real estate, the best piece of property to put up for sale wouldn't be a house. The hottest listing going would be a small, old commercial building.

A rowhouse, no matter how grand or spacious, can't compete with a former bar, Laundromat, oil company office, hardware store, fire station or an empty warehouse that offers significant potential for those with ambitious visions of home.

In neighborhoods long on the road to gentrification, old-guard commercial spaces - such as little warehouses or machine shops - no longer fit into neighborhoods redone with new, high-priced residences that boast built-in garages.

These boxy, paint-peeling structures might be too small to be converted into multifamily housing, but they are perfect for those looking to unleash pent-up eccentricities.

"People are being more creative; they are not afraid to buy commercial properties anymore," said Mary Zimmerman, a real estate agent with Zimmerman Realtors who has transformed a commercial property into a residence in Federal Hill.

There was a time when these spaces were seen more as off-beat, cheap finds for those who didn't mind living around odd structures such as meat lockers or elevators shafts. But, as Dave Carey, senior loan officer for Equitable Trust put it, "Oddball is in."

Carey, who has watched and financed many of the commercial space conversions in Canton and on Baltimore's east side, said people realize they can transform a commercial site into a wide house with high ceilings and tremendous square footage, things increasingly rare in neighborhoods of 12-foot-wide rowhouses.

"They are few and far between, and they bring a premium," said Carey.

Frank Lanham, an agent with Coldwell Banker Residential Brokerage who has orchestrated conversions throughout Fells Point and Canton, said he wishes he had more property to meet the demand.

"I have a lot of people calling constantly for small, mid-size warehouses where they can build the ultimate house," Lanham said.

These days, he's lucky if he has one to show.

Lanham, who has scoured the Fells Point-Canton area, is looking into Highlandtown. Securing a broken-down warehouse is tough enough, but turning it into a dream home is not cheap.

Just talk to Pam Malone.

More than two years ago, she was fixed on finding and building a customized, New York-style loft in the Canton area. A neighborhood dominated by small rowhouses, Canton isn't exactly ripe with undiscovered spacious warehouses.

After intense hunting, Malone found her opportunity on Fait Avenue in what was once the Butt's Hardware store. It had 3,400 square feet and expansive open floors that had been used to store inventory.

When Malone got through with it, she had spent $145,000 for the building and $175,000 to transform the hardware store into a loft-style residence.

The abundance of space in the old hardware store was an invitation to go to extremes. It was the kind of place where she could copy the size and stature of an industrial stairwell from an architectural magazine. It cost more than $20,000 to fabricate and lift in by crane. The staircase, with landings seemingly the size of small patios, is a central feature of the house.

She created two bedrooms and allocated the remaining footage to the living areas.

She has placed the bedrooms on the first floor. The kitchen and living room went upstairs on an expanse of hardwood floors that stretched before 13 windows. "I tend to like big, bold statements," she said. "I tend to like a masculine feel. No floral designs."

Like Malone, many of the buyers know they are entering into costly ventures. Perhaps it's all the space, but commercial conversions inspire extravagant spending. For an old warehouse, nothing seems too expensive for places waiting to be showpieces. Carey said the commercial spaces are perfect for people who want to get noticed. "Everybody shows off what they have. These properties allow you to do it a little bit more," he said.

Illustrating how the buying climate for commercial properties has heated up during the past few years, Carey said Malone bought her building from an investor who had held the old hardware store for three years. The investor had bought the hardware store just after it closed in 1997 for $50,000 and waited until he got his price.

Today, commercial conversions are too good to sit on. In Locust Point, a small barbershop is fetching $175,000.

"These properties are not as attractive to the investor as ... to the homeowner," Carey said.

Zimmerman knew she had come across something special six years ago when an old laundry service building on William Street came up for sale.

It was a 4,000-square-foot corner building with three apartments on the upper levels. Instead of dividing the place up for sale, Zimmerman paid $48,000 and invested $150,0000 to turn it into a Federal traditional home for her family. She didn't necessarily see her house as an investment, but rather as an opportunity for more spacious living in the middle of the city.

"That's why buyers are coming in and saying, 'Wow, this looks like a big job to tackle,' but in the end it is an incredible piece of property," she said.

Before all that potential can be realized, commercial properties come with hassles.

Those who have gone through the odyssey will itemize their problems, such as ensuring no toxic waste is buried on the property, removing heavy equipment or being confronted with large commercial windows and corner doorways that don't fit with newly minted floor plans.

For Peter Chesner, converting Tanya's Bar in Canton into a three-story bachelor pad was a test of patience. He wanted, he said, "something out of the ordinary." What he got for $175,000 was an old closed bar and the three-story shell next door with hidden problems. He had just two electrical sources and two water sources. Also, he was always allaying neighbors' fears that he was opening another bar on the quiet block.

Worst of all, he had problems getting a residential mortgage for a commercial property.

"If you're buying something on a commercial basis, you have to have the collateral to back it up," he said. "Trying to convince a bank that I was building a private residence was a task."

Chesner spent an additional $135,000 to bask in the 3,500 square feet of space.

At first, he was nervous about spending so much, he said, "but now when I see what they are selling for, I feel better."

Commercial rehabilitations might be too awkward for investors, but they are perfect for those who want to build for themselves.