ST. LOUIS — The developer behind the planned rehab of the Butler Brothers building has closed on financing for the $130 million project, allowing construction to begin on one of downtown’s largest vacant buildings.
“We have pulled the permit and we’re mobilizing this week,” said Gary Prosterman, president and CEO of Memphis, Tennessee-based Development Services Group. “Everything is in order to proceed.”
The project will convert the 1906 structure originally built for a turn-of-the-century wholesaler into 384 apartments, with 400 underground parking spots, space for a street-level restaurant and possibly a second eatery or bar with rooftop access. Just two blocks away from the under-construction Major League Soccer stadium, about half of the apartments are expected to open by next summer, while the remainder wrap up in early 2024.
A former distribution warehouse for the Ben Franklin retail chain before its 1996 bankruptcy, the Butler Brothers building has sat mostly unused for the better part of 20 years. Its massive size — it covers an entire city block at Olive and 17th streets — has made it both a daunting project and a building city leaders knew was key to redeveloping the downtown area.
“It really should be what we call a catalytic project, in its scale and in the fact that you have 380 residents coming to this area with good jobs, with money to spend,” Prosterman said. “Activity begets more activity.”
Prosterman’s firm bought the building a year ago for $6 million, its first foray into the St. Louis market aided with a loan from Greater St. Louis Inc. real estate arm to cover a portion of the acquisition financing. Development Services Group brought with it years of experience rehabbing large historic structures in other cities, complicated projects that often throw up unforeseen structural hurdles.
“We have a team that’s very experienced in doing these major adaptive reuse projects,” Prosterman said. “But we’ve never completed one without finding lots of surprises.”
He said the company has designed the apartments knowing that many people now clock part of their work week from home, adding office “nooks” into the units as well as common work areas.
About $24 million in Missouri Historic Tax credits, allocated to a prior owner and available for use on the project, plus another $18 million in federal historic tax credits are bridging the financing gap.
Bank of America is leading the construction financing, with Meta Real Estate Partners serving as the junior construction lender.
“We’re proud to work with DSG to revitalize this iconic building in Downtown West, which further demonstrates our commitment to St. Louis,” Marilyn Bush, president of Bank of America St. Louis, said in a statement.
Paric Corp. is the general contractor for the project, and Trivers is the architect.
About 25% of the units will be designated as “workforce housing,” charging rents deemed affordable for those making between 80% and 120% of the area’s median income — which equates to between $1,200 to $1,800 per month. That stipulation was required under a deal negotiated with the city in exchange for tax abatement on the property over 15 years.
Prosterman said there was a “bit of a learning curve” during negotiations with the city, which had a mayoral transition and a change in leadership at the St. Louis Development Corp. while he was working on the project.
“But everyone worked patiently and diligently on both sides to figure something out,” he said. “I think the city recognizes it’s a massive building in a strategic location. It just needs to happen.”
Read the full story by Jacob Barker at the St. Louis Post-Dispatch.