More risk? Check. More cost? You know it. Rezoning and re-entitlement hurdles? Not uncommon. Lead and asbestos remediation? Expect it. Complex financing? A given.

Jonathan Holtzman knows all of these things about the adaptive reuse of historic office buildings as apartments, but still the outspoken CEO of Farmington Hills, Mich.– based Village Green hasn't heard one good reason why his firm and others shouldn't be engaging in adaptive reuse as the apartment sector emerges from recession. “I don't know if there's any single valid argument from anyone, on any side, to not preserve and convert historic buildings,” Holtzman says.

Since restoring the Fife Shoe factory and corporate headquarters in downtown Detroit in 1980, Village Green has rebuilt 15 highly varied office properties, from Catholic school admin buildings to urbancore towers. Holtzman says adaptive reuse packs in more place-making, walkability, and green attributes than even the best of new urban apartment construction. Better than that, office conversions provide developers who have the mettle with an even more enticing proposition: profitability. “On the left hand, historic preservation is more expensive and more complicated than new construction, but on the right hand, it's a better product and a more interesting product to the customer,"

Holtzman says. “Typically, no two apartments in a conversion are the same. Yes, every element of the process is difficult and riskier, but when you finish the product, it's more profitable. Done right, a historic preservation will economically outperform new construction."

Village Green's latest adaptation is the $146.6 million restoration of the 45-story Randolph Tower in Chicago, designated a City of Chicago Landmark in 2006 and listed on the State of Illinois' and the National Park Service's Registers of Historic Places in 2007. Designed by architects Vitzthum & Burns and built in 1929 as the Steuben Club Building, it's one of the few remaining examples of Historicist Gothic Revival skyscrapers in Chicago. Village Green ultimately purchased the property—at the behest of then-mayor Richard Daley—out of bankruptcy court.

“Mayor Daley called me into a meeting when this building was bankrupt, deteriorating, and wasn't producing much in the way of income and real estate taxes," Holtzman recalls. “He said, ”˜Can you do this transaction?' I said yes. He said, ”˜Can you do green?' I said yes. He said, ”˜Can you do 20 percent affordable?' I said yes."

The city of Chicago responded in kind with tax increment financing, part of a financing package that Holtzman admits isn't for the faint of heart and includes several components (see “Randolph Tower," above). For competitive reasons, Holtzman declined to comment further on the makeup and relative share of each component.

Randolph Tower will follow the National Green Building Standard and have 20 percent of its units set aside for households making no more than 50 percent of the area median income. Move-in is anticipated for the first quarter of 2012, when Holtzman's profitability claims will hopefully be put to the litmus test by Gen Y hipsters.

“These buildings benefitted from the Craftsman era and are wonderfully eclectic [along] with state-of-the-art heating, cooling, and electronic systems,” he says. “It's the best of both old and new, and that's why you get that economic performance."