- Property: Riverport
- Developer: Ashley Development
- Location: Bethlehem, Pa.
- Renovation Cost: $45 million
- Scope of Project: Adaptive reuse of a machine shop
In the little town of Bethlehem sits a newly redeveloped 4.5-acre mixed-use property with a 65-year history inescapable from the Pennsylvania steel town's industrial roots. The building formerly served as the Johnson Machinery Shop for the Bethlehem Steel Co., once the second-largest steel manufacturer in the world. And for a handful of the property's residents, this project qualifies as a piece of personal history: Their relatives worked at the building when it was an armament factory during World War II and for two decades later as a warehouse and steel foundry.
Today the property, called Riverport, is helping Bethlehem transition from its days as a company steel town to a trendy hub for living, shopping, and dining. The mixed-use masterpiece includes 171 condos selling from $160,000 to $600,000; an upscale gym; a restaurant that seats 500; plus public and private parking. "Riverport is bringing affluent residents to the center of town, which will then support our central business district," says the city's mayor, John Callahan. "The median income of a resident is $62,000 a year, nearly twice the median income of the average resident in Bethlehem."
The project, which is nearly 90 percent sold, is located in the Lehigh Valley (just 80 miles west of New York City), not far from two major Bethlehem employers: St. Luke's Hospital and Lehigh University. Louis Pektor, president of local firm Ashley Development Corp., purchased the warehouse in 2002 from a group of developers who had unsuccessfully tried to transform the space into an office and retail complex.
Lehigh Valley native Pektor had originally planned to build for-rent units but decided to switch to a for-sale product because of strong interest and the high remediation costs. A wise choice indeed: The project collects one of the highest prices per square foot of any housing community in the area. "It has instilled a lot of confidence into investing in that neighborhood," says Pektor.
Going to Battle Walking around Riverport, you can't help but consider the building's rich history. Outside, a fountain area features a restored 1940s ore core, while a couple of authentic overhead cranes add character to the property's two football-field-sized courtyards.
The transformation of this vast industrial site into living and commercial space was "absolutely the most challenging project we have done," says Pektor, who is no stranger to adaptive reuse work. Ashley Development invested more than $45 million to restore and remediate the building. Obtaining financing quickly proved to be the first–and biggest–hurdle. "The moment we went to the scheme of building within a building, our lenders dropped away," recalls Pektor. National City Bank finally agreed to sign on after nearly 20 other lenders said no. (Other funding included historic tax credits, as the project is listed on the National Register of Historic Places).
Before the firm could even begin its redevelopment work, it had to use a liquid nitrogen cold jet cleaning process to remove all environmental contaminants from the site's interior. (Fortunately, no soil contamination was discovered.) Next up: the creative placement of the units and commercial space within the vast 198,000-square-foot interior space, while keeping all the original windows in place (as required by the National Park Service).
But to make Riverport financially pencil out, the project needed to have three stories of living units within the shell of the two-story building. "We had a real design challenge to be able to utilize the existing windows and that light to create attractive living conditions within the building on a three-story plate," says Pektor. For more light, the team innovatively stacked the units around the project's two massive courtyards.
The team was also tasked with restoring all of the exterior bricks. Thanks to a little detective work, the developer located the original brick manufacturer, who supplied bricks not only to patch up the building's exterior but also to create matching interior brick walls.