The Industrial Revolution may be a thing of the past, but many of the old mills that produced flour, wool, cotton, and more still stand today as testimony to the manufacturing economy that helped grow our country in the 1800s. Some of these aging behemoths are being razed to make way for progress, but others are finding new use as residential and commercial properties in cities around the country.

After all, many of these brick and stone structures are located along picturesque waterways in high-demand areas, making such conversions appealing to many developers.

Workers at the Lawrence Manufacturing Co., which dates back to 1833, assembled undergarments and hosiery in this Massachusetts mill. These days, the mill houses a mix of condo units.
Renaissance on the River Workers at the Lawrence Manufacturing Co., which dates back to 1833, assembled undergarments and hosiery in this Massachusetts mill. These days, the mill houses a mix of condo units.

That's what attracted Anchorage-based developer Grace Pleasants to a property in Tacoma. Wash. "Albers Mill was special because of its location and its importance to the city," she says. "The building is next to the brand new Museum of Glass done by world-renowned architect Arthur Erickson. And the waterway, of course. These were the major reasons that I fell in love with the Albers Mill site."

And they're getting some help. Both state and federal governments offer tax credits and grants for eligible projects. And in areas where housing inventory is tight, city leaders are adding their own incentives to encourage developers to find new uses for abandoned or inactive mills, many of which are local landmarks.

"From the city's point of view, they have beautiful old buildings occupying large pieces of land," explains John McIlwain, senior fellow for housing at the Urban Land Institute in Washington, D.C. "Reusing them creates a continuous fabric and brings life in terms of people and economics to the area."

Renaissance on the River

But such projects can be challenging for developers. Successful mill-to-multifamily conversions require vision, salesmanship, financial savvy, and perseverance, as the following stories show.

Renaissance on the River, Massachusetts

One Project, Two Styles

Renaissance on the River, a new condo community in the old Lawrence Manufacturing mill, gives residents their choice of industrial or traditional floorplans.
Renaissance on the River Renaissance on the River, a new condo community in the old Lawrence Manufacturing mill, gives residents their choice of industrial or traditional floorplans.

Most mills are converted to lofts because the open floors lend themselves to that style. But not everyone who wants to live in a historical property wants an industrial feel. "Some buyers like the loft format, and some like softer features that you find in more traditional condos," explains Matt Mittelstadt, development project manager for Edward A. Fish Associates, the real estate development consulting firm in Braintree, Mass., that developed Renaissance on the River at Lawrence Mills.

The company decided to appeal to both segments of the market by making one building lofts and the other condos, so prospective buyers could choose the floor plan they preferred. The strategy worked. Both of the Lowell, Mass., buildings were 100 percent pre-sold, helping finance the $30 million project.

The River Building was developed first. "It's all lofts with concrete floors, wood timbers, and exposed brick," Mittelstadt says. Each unit has huge windows providing views of the Merrimack River, a new $9 million public park, or the ball park for the Lowell Spinners, the minor league cousin of the Boston Red Sox. Additionally, builders were able to preserve the building's smokestacks, so six units have a rounded brick element that serves as a fireplace and chimney. "That's been a huge feature and selling point," he notes.

Renaissance on the River

The Mural Building came next, so named for the large mural that adorns the façade, adding to the historic aesthetic. This building has more traditional condominium units, with finished floors and interior walls that create a more conventional floor plan and feel. Each unit also retains the high ceilings and large industrial-size windows found in the original structure, a hosiery and underwear mill dating back to 1833.

The net square footages for both the lofts and the condos are consistent in both buildings, but there's a slight price premium in the Mural Building to cover the cost of the extra in-unit improvements. Condo-style units are priced in the $200,000s; lofts units go for $160,000 to $200,000.

"A couple of buyers have actually purchased units in both buildings to determine if they prefer the loft or conventional configuration," says Mittelstadt, who says these double-dippers plan to live in one unit (once they decide which they like better) and rent or resell the other.

Albers Mill, Washington

Superfund Equals Super Find

While developers should be prepared to do some environmental remediation at most mill sites, a few properties do sit atop seriously contaminated areas. The Albers Mill stood in a brownfield along Tacoma's Thea Foss Waterway, a former Superfund site. (Created in 1980, the federal government's Superfund program investigates and cleans up the most contaminated hazardous waste sites like abandoned warehouses and landfills.) But instead of looking away from the site, Pleasants, director of developer Heritage Properties, looked ahead to the proposed revitalization of the waterfront following a $90 million clean-up.

For more than a century, this room was the site of a mass textile production line. After being cleared out for renovation, it's now part of the Renaissance on the River development.
Renaissance on the River For more than a century, this room was the site of a mass textile production line. After being cleared out for renovation, it's now part of the Renaissance on the River development.

"The mill is a very simple, strong structure that speaks of the working history of the working waterfront of Tacoma," explains Pleasants, whose Anchorage-based company develops, consults on, and renovates historic rehabilitation tax-credit properties. Her dream? To convert the 100-year-old flour and cornmeal mill into 36 loft-style apartments and ground-floor commercial parcels.

Despite the environmental issues, the location certainly held promise for such a property. The Albers Mill building was walking distance to restaurants, the University of Washington-Tacoma tech campus, and a light rail station. It also had another bonus: It was situated next door to the city's new Museum of Glass and the remarkable Bridge of Glass. Designed by artist

Dale Chihuly, the 500-foot pedestrian bridge connects the Foss Waterway area to downtown Tacoma.

This former flour mill was converted into a 36-unit loft-style apartment building. After a $90 million clean-up, Albers Mill is now a fully leased rental community.
ChipVanGilder/www.chipshotphoto.com This former flour mill was converted into a 36-unit loft-style apartment building. After a $90 million clean-up, Albers Mill is now a fully leased rental community.

But turning Pleasants' vision into reality was a challenge. Before construction could begin, the local and state government that had to clean up the 46,875-square-foot Albers Mill site, plus the rest of the waterway development area that had topsoil contaminated with hydrocarbons and other contaminants from several underground storage tanks nearby.

"You have to be fairly practical and realistic about what you can accomplish," Pleasants says. "We learned it will never be 'clean,' but it did have to reach a level of environmental safety that the community feels is acceptable."

This goes for regulators and attorneys, too. "Indemnification becomes a huge issue with respect to your lender and investors," she adds. "We have a legal indemnification with an agreed-upon state and federal consent decree. I've got three 8- to 10-inch thick binders full of it."

Such assurances and legal advice is where much of the money goes on such a project. "You really pay for the environmental lawyers," Pleasants admits. "I have good ones, so they got through it fast–but still, it was expensive." That's why she suggests having a 25 percent to 30 percent contingency in the project budget if a developer is working on an environmentally compromised site.

Today, the fully leased Albers Mill is considered the gem of the Foss waterway, Pleasants says. "People are glad to have cool rental housing in a progressive setting."

The Flour Mill, Colorado

A pioneering project

Denver's no stranger to pioneer projects. But when local historic preservationist and developer Urban Neighborhoods decided to do the city's first industrial-to-residential conversion, some were skeptical.

"The site is close to railroad tracks, and the city planners had a prejudice against that," explains Dana Crawford, a partner in Urban Neighborhoods, which has redeveloped more than 800,000 square feet of historic property in the city's Lower Downtown Historic District. "I had to convince them otherwise."

Before The Flour Mill became a loft-style condo building with soaring ceilings and inviting windows, the century-old mill was unoccupied and covered with graffiti.
Courtesy Urban Neighborhoods Before The Flour Mill became a loft-style condo building with soaring ceilings and inviting windows, the century-old mill was unoccupied and covered with graffiti.

She did that by developing case studies of East Coast mill-to-residential projects that were successfully leased or bought despite the active tracks running by them. The tactic worked, and the city eventually decided to put a public park immediately to the west of the former mill.

Crawford's lenders also wanted to see other successful projects, as well as proof that the concept had strength enough to drive sales in Denver. (Most lenders require a certain percentage of presales, which can vary depending on the project and the loan amount, to approve construction funding.) "Presales are key, because they take the risk out of it for the bankers and they allow you to find out who's really interested in seeing a great building come to lifein an interesting neighborhood," Crawford explains.

But how do you capture condo buyers (and their checkbooks) when your project's current reality is a musty old mill dating from the early 1900s? "It was a beautiful, but scary, building," Crawford admits. The old flour mill was structurally sound, but in bad repair and covered with graffiti.

Still, Crawford knew loft living was wildly popular in Denver and that any building with high ceilings and huge windows would raise interest. Plus, the central location near the interstate would appeal to residents working downtown as well as those seeking commanding views of the Rocky Mountains, the Platte River Valley, and downtown Denver.

Even with such advantages, she knew selling the property from plans and models wouldn't be easy. "Buyers have difficulty visualizing the final product," she says. So Crawford turned to a mix of old-fashioned artistry and high-tech offerings. "To convince them, the architect did a beautiful watercolor rendering of the exterior," and a computer model provided a virtual tour. Then, as soon as the building was cleaned up and deemed safe, Crawford began doing actual walk-through tours. "When people saw the views, they were sold."

Demand proved to be so strong that Urban Neighborhoods built a second building on the site, complementing the historic mill with new construction.

Indiana Cotton Mill, Indiana

The Tale of the Tape

For years, developers saw green whenever they looked at the 67,000-square-foot Indiana Cotton Mill in Cannelton, Ind. But none could get a project to pencil out. Today, though, they're green with envy after the nonprofit Lincoln Hills Development Corp. successfully renovated the property into 70 affordable housing units.

An Indiana historical foundation had named the Indiana Cotton Mill the state's most endangered historical landmark before it was converted it into affordable housing.
Lincoln Hills Development Corp. An Indiana historical foundation had named the Indiana Cotton Mill the state's most endangered historical landmark before it was converted it into affordable housing.

"We believed at that time, and still believe, that the conversion of the mill to affordable housing was the only feasible idea to preserve and restore it," says Larry K. Kleeman, executive director of the Tell City, Ind.-based nonprofit, which purchased the building in 1999 and began an $8.1 million renovation. One of the state's 12 national historic landmarks, the Indiana Cotton Mill was built in 1849 and processed cotton until 1974.

Not surprisingly, a skillful financial plan made the Lincoln Hills effort possible. "One challenge that we overcame was coordinating and matching numerous different requirements of the multiple funding sources," Kleeman says. Most affordable multifamily projects have 10 to 12 sources of financing, and the Indiana Cotton Mill was no exception. The biggest players? Federal programs, which contributed $3.9 million in low-income tax credits and $1.4 million in historic tax credits. Other local, federal, state, and nonprofit sources also provided hundreds of thousands of dollars, from $320,000 in HOME funds to $250,000 from Save America's Treasures, a public/private partnership between the National Park Service and the National Trust for Historic Preservation.

Creating an affordable housing project on a historic site did allow more opportunities for financing, but wrangling so many lenders did require more time and attention from the nonprofit developer. Nearly four years passed between the first planning meeting and the day residents moved in. "We are fortunate to have an experienced fiscal and accounting department that routinely manages multiple funding sources and reporting requirements," Kleeman says.

But the extra effort was worth it, both for preservationists and affordable housing advocates.

With its sandstone exterior restored and original exposed beams and column supports integrated into the design, the Indiana Cotton Mill now provides affordable apartments for 70 individuals and families in a treasured state landmark.

–Margot Carmichael Lester is a freelance writer in Carrboro, N.C.

A Window On Historic Preservation

Developers must meet modern expectations and maintain old-fashioned appearances at the same time.

Making an old building function like new–without looking like it–isn't easy.

Finding windows that look old but perform like new poses a particular problem at designated historic sites. While large apertures are a big plus for residents and buyers, they can be a big headache for developers since most industrial windows don't conform to standard residential sizes.

"Getting the windows reproduced was a challenge," Urban Neighborhoods' Dana Crawford says of the Flour Mill in Denver. "We did extensive research on windows and window systems that could provide the needs of modern-day [homeowners], be affordable for the project, and meet the historic concerns." But finding off-the-shelf low-E glass windows in the required size was impossible. "We ended up going with custom millwork."

Many developers involved with historic properties must retain old elements, even if they can't be used by residents. "We were required to maintain the original wooden spiral stairway that is in one of the towers," Larry K. Kleeman says of the Indiana Cotton Mill developed by Lincoln Hills Development Corp. "We installed a glass partition so the stairway is visible but not accessible." Even the building's exterior had to be specially treated to look restored, not new, using a cleaning process that had to be approved by the state historic preservation office.

Despite the constraints, John McIlwain of the Urban Land Institute expects to see more historic mills renovated for residential use. The continuing strong real estate market and a renewed interest in urban living are driving the trend, he says. Interest rates and other financial considerations also help. "As long as the tax credit is available," McIlwain says, "there should be steady flow."