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From his office at 1006 Olive St., Craig Heller heads north on 10th Street, walking about a block to an 11-story brick building still best known as the Merchandise Mart Annex. Built in 1913, the annex is connected by tunnels to the next-door Merchandise Mart, where, during the heyday of the St. Louis garment industry, manufacturers showcased their shoes, shirts and textiles.
When Heller bought 417 N. 10th St. two years ago, the building had been vacant for seven years, filled with castoffs from the building's later incarnations as a print shop and a lens-grinding business. Obsolete computers were stacked high on the sixth floor. Workers have since cleared out the debris, and for the past year they have been busy transforming the building's storage and manufacturing spaces into open, airy loft condominiums, ranging in size from 1,530-3,800 square feet and priced from about $120,000-$280,000. The customized spaces are furnished with the kind of contemporary details typical in a big-city loft: stainless-steel appliances, refurbished original maple floors, exposed brick walls and 7-foot-high windows offering a sweeping view of the heart of downtown. Heller plans retail spaces at the street level of his building; floors two and three are set aside for commercial office space.
Before Heller can make it inside his building this summer morning, a man who works nearby stops him on the street. "Let me know if something opens up," the man requests. Heller nods, then moves on. It's a question he often fields these days, but anyone interested in buying in the Merchandise Mart Annex, renamed the 10th Street Lofts, is out of luck. Last fall, all 31 units sold out in six weeks. Seventeen sold in a single day. The first residents will be moving in Sept. 11.
Heller's project has been closely watched by virtually everyone with an interest in downtown real estate. After years of unrealized expectations, the housing market in downtown St. Louis is showing signs of taking off, and Heller's loft building is among the projects leading the way. Hundreds of potential owners and tenants have put their names on waiting lists. Rents are rising in the Washington Avenue loft district, 28 condominium or rental projects are planned or actively under construction downtown, and speculators and developers have bought up dozens of empty buildings.
Heller predicts housing will transform downtown St. Louis -- creating a vibrant 24-hour urban atmosphere -- in a way many big-ticket projects such as the Trans World Dome, Kiel Center and the Gateway Mall have failed to.
A Southern Illinois native, Heller, 39, moved to St. Louis in 1989 after living around the country while working as an airline pilot, including Minneapolis and Lancaster, Pa. Now semiretired as a pilot, Heller still flies once a month for Northwest Airlines, but he spent much of the 1990s as president of Pyramid Construction, which built hundreds of homes in the city, from gut rehab to historic replicas. He sold his share of the company about two years ago to partner John Steffen to form his own company, Loftworks, that focuses on loft conversions, mostly downtown but also in Lafayette Square. His 10th Street Lofts building cost about $7.5 million to renovate, and he now owns a total of seven buildings downtown.
Not only did his project involve delving into an unknown market as the first for-sale loft condominiums downtown, it meant enlisting the help of commercial union contractors who'd never built a project like it. "I guess nobody really wants to be the first," Heller says. "You can't sell for as much; you're testing the market. Being the first doesn't bother me at all. I wanted to be the first.
"As a for-profit developer, I intend to make money and a living doing this, but I also do it because I want to see St. Louis live up to its potential. It will never live up to its potential if downtown continues to have this image of the central business district. People go to work, and it's OK if you go down for a Cardinals game or the Rams, but other than that, it's nothing. Why can't it be like Chicago? I'm not saying a humongous downtown like they have, but why can't it be like Minneapolis, where 30,000 people live downtown and they're building like crazy. Why can't it be like Portland, Seattle, Denver, where it is the place to be because of the great old buildings, the type of lifestyle? What we want to create is a neighborhood that is truly walkable, a true urban village."
A furnished model at Heller's project on 10th Street was one of 20 stops at existing and planned residential projects on last year's downtown-development tour. The September tour drew more than 2,000 people. The Downtown St. Louis Partnership compiles a list of people interesting in buying or renting downtown; at last count, it was 650 and growing every week. Another downtown-development tour is scheduled for noon-4 p.m. Sept. 10, beginning at Windows on Washington at 15th and Washington, and a big turnout is expected again.
The apparent demand for a downtown lifestyle is fueling rising rents, skyrocketing prices for empty buildings and a frenzy of planned residential projects. The price of some empty buildings, which sold for less than $1 a square foot in the early 1990s, has risen 10-fold. Heller says he bought his first building, the Merchandise Mart Annex, two years ago for just $1.70 a square foot; he bought his most recent building for $15 a square foot.