Old Market to get more apartments

Nov 04, 2008 (Omaha World-Herald - McClatchy-Tribune Information Services via COMTEX) -- EK | Quote | Chart | News | PowerRating -- The new owners of an Old Market building at the northwest corner of 12th and Howard Streets plan to rehabilitate the dusty and vacant upper four floors into apartments.

Because the building is in the heart of the Old Market, and the first floor is home to longtime tenant Delice European Bakery and Cafe, the vacant floors surprised majority investor Glenn Friendt.

"I have been coming to the Old Market for 20 years as a tourist, and I had a feeling that all the buildings there had been redeveloped," said Friendt, who was invited into the project by entrepreneur Eric Wieseler. "And (Eric) said, 'No, no, not this one.'"

Friendt said the investors are negotiating a new lease with the owners of Delice, and they hope the popular cafe decides to stay. The current lease expires in April 2009.

"I think they're kind of a fixture down there," Friendt said.

Delice owner Pat McDermott was unavailable to comment.

Friendt, Wieseler and Old Market resident Cheryl Beamer formed a limited liability company to buy what is called the Gahm's Block Building at 1202-1206 Howard St.

Friendt is a former director of the Nebraska Center for Entrepreneurship at the University of Nebraska-Lincoln and also was involved in a technology startup company called PracticeWorks that was purchased by Eastman Kodak in 2003.

Wieseler handles leasing for commercial real estate firm First Management and has dabbled in development.

Beamer is a senior executive at Gallup.

Friendt said he and Beamer are interested in encouraging young entrepreneurs, Beamer and Wieseler live downtown, and Friendt also has a passion for preservation.

"All of those passions kind of came together in this project," he said.

Beamer and Friendt saw that the business venture proposed by Wieseler showed promise.

"His research really confirmed that with a number of past buildings being converted to condos that there really is a need for some rental units right in the Old Market," Friendt said.

The three investors bought the building for $2 million and plan to invest another $1.8 million into rehabilitating floors two through six. The 14 to 16 one- and two-bedroom apartments will range from 700 to 1,900 square feet.

Rental rates have not been set but could range from $1,000 to $2,000 a month, Wieseler said.

The number of rental units in the Old Market has decreased in the last five years as developers converted many into condominiums. A January 2004 fire destroyed the Butternut Building, which was being converted into apartments, Wieseler said.

A building called the Old Market Lofts/Butternut building -- but different from the burned and demolished Butternut -- contains 266 apartments southeast of 10th and Jones Streets. The 74-unit Skinner Macaroni Apartments at 14th and Jackson Streets is another of the biggest complexes downtown.

"In the heart of the Old Market, there are very few (apartments)," Wieseler said. "And the ones that are there, they are essentially full and there are waiting lists."

The need for apartments is even higher when coupled with today's economic pressures, which have made obtaining mortgages more difficult, he said.

The investors plan to apply for preservation tax credits, which would require that units be rentals for five years, Friendt said.

"Our feeling is that even if we chose not to use the preservation tax credits, that the demand would be there and that we would want to start these out as rental units," he said.

The investors applied for tax-increment financing, which allows companies to use property tax revenue generated by a project to help pay part of the costs. The Omaha Planning Board approved $456,187 in tax-increment financing, and the City Council is expected to vote this month.

Crews are starting to clean the upper floors to prepare for construction in January, Friendt said. The work will involve removing asbestos on pipes, removing plaster to expose brick walls and sandblasting wood columns.

The first units could be available next September or October, with the entire project completed in January 2010, he said.

The building also is home to Bellwether Boutique, a vintage clothing store that opened in June in basement space under Delice.

Friendt said that the basement level includes additional space that could be used for a retailer or restaurant.

Bellwether's owner, Jessica Latham, said she recently met one of the investors and looks forward to working with him. Her lease expires in May 2009.

"I'd really like to continue to be down there as long as possible," she said.

--Contact the writer: 444-1183, christine.laue@owh.com

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