By Michael Lafeur, Sun Staff
LOWELL During the next three years, nearly 740 market-rate apartments and condominiums are planned for downtown, a residential building boom unlike any the area has seen in decades.
The rash of historic preservation-based development fueling the spurt has made the downtown area one of the hottest emerging real estate markets in Massachusetts.
"We get, I would say, probably two calls a week from investors who want to buy a building in Lowell," said Fred Faust, president of the Lowell-based EdgeGroup real estate firm and the former chairman of the Greater Lowell Chamber of Commerce.
Developers are betting that low interest rates and skyrocketing prices elsewhere in eastern Massachusetts will combine with downtown's burgeoning cultural scene, ethnic melting pot vibe and architecturally striking, historic buildings to attract people who want to live in an urban setting but can't afford metro Boston.
Already, the downtown buzz has drawn the likes of artist Diana Coluntino, who plans to open a studio on Market Street, as well as Seth Ditchik and his wife Adrie Kornasiewicz, who will buy their first their home in the old McCartin Electric Building. It enticed Boston-based developers Matthew Abrams and his partner Jeffrey Brooks to invest $14 million in a 134-unit, "Soho-style" apartment complex on Dutton Street.
"This really could be the city outside of Boston, the second city," Coluntino said. "It's just a matter of people discovering it."
The downtown arts district, concentrated around Dutton, Middle and Market streets and the cobblestoned ways in between, consists of cultural attractions like the Revolving Museum, bars and live music venues like Evos Arts Institute and an array of ethnic restaurants and coffee shops.
Nine residential renovation projects are either in the works or on the drawing board, representing more than $82 million in capital investment. It is targeted for places that have long resisted development, such as the Lawrence Mills, Boott Cotton Mills' East Mill, the Dutton Yarn Building and the remaining vacant portions of Canal Place and Massachusetts Mills.
If they all succeed, it would mean the restoration of almost every building in the downtown core and the revival of a crucial new customer base for area businesses.
The key turning point came three years ago, when the Ayer Lofts Building on Middle Street added 100 new market-rate units to downtown. Add in the new condos and apartments, and the ratio of subsidized to market-rate housing in the area drops from 81 percent to 45 percent.
"It basically builds the market demographic downtown that we've been trying to build for years," said Colin McNiece, Lowell's economic development director. "To date, it's been really difficult to build on the base. We've had a couple really strong restaurants. We've had a couple really strong retailers. But over the years, it's only been a couple. That's hard to do when you can't demonstrate a market."
The only danger is market saturation, particularly with the luxury apartments, which will account for more than half of the new units.
While downtown condominiums offer more space for less money than around Boston, the apartments offer more space for comparable prices, making them appear somewhat less competitive.
"My uneducated theory is that (apartment developers are) looking at the cost to do business in Boston, they're looking at the rents achieved (there) and they're betting that the things that make Lowell desirable for sale will translate to the rental market," Faust said.
"It's not there today. The question is how long will it take for them to achieve their rent and occupancy rates. We're all hoping they'll be successful, but we're all scratching our heads in the meantime."
At the Dutton Yarn Building, which The Abrams Group is developing at 305 Dutton St., each apartment will be relatively spacious and have windows almost from floor to ceiling. They will rent for $1,150 to $1,650 a month. Scheduled to open in November, they will be the first major, market-rate apartments to come on-line in the area.
"Lowell just fits the profile of the type of market that we want to invest in, an area where we see the market start to gentrify," Abrams said. "We have looked in markets like Fall River, New Bedford. I just don't see the dynamics there. I don't see the potential for job growth. I don't see they have the proximity to high-tech."
He said he is confident there will be demand for his units.
"Our feeling is that clearly, there is a need for it," he said. "It's a unique product. We have a fantastic location. We're close to the commuter rail. It's city living at the prices of the suburbs, and it's not cookie-cutter like all the other garden-style developments that are going on. We've already started renting"
But for the current crop of real estate entrepreneurs to make their developments a success, it will take more buyers and tenants like Ditchik, 31, and Kornasiewicz, 29.
Now living in Dorchester, Ditchik said he and his wife want to live in an urban, loft-style setting and own a condominium that is big enough to start a family in. They can't afford Boston. They just bought a $220,000, two-story, two-bedroom, 1,500-square-foot condo in the McCartin Building at 165 Market St., which is now called Market Gallery Lofts.
"We were pretty much priced out of buying anything in the Boston area, and we didn't want to live in some suburb," Ditchik said. "We sort of stumbled on to Lowell. We went to visit one day and just fell in love with the city."
Coluntino, an artist and Andover-based personal trainer, similarly fell for the city after making her first visit here at last year's Folk Festival. She moved here from Everett last month with her teenage son, who has started classes at Lowell High School.
She is now renting a $1,500-a-month two-bedroom apartment in the old Harmon Paint Building, 338 Market St., and plans to open a studio in one of its storefronts, where she will offer classes in her artistic specialty, hat-making.
Philippe Jeanjean, 46, and his wife, Genet, 42, now renting a home in the Davis Square area of Somerville, also have bought in the Market Gallery Lofts. Jeanjean said they were attracted by Lowell's affordability and its "personality" the sense of vibrancy and rebirth.
"Lowell doesn't have the best of reputations, yet people are very excited about changing it," he said. "When the real estate agent took us to the loft, which was still being built, we looked at each other, we looked at the cobblestone streets, we looked at the different shops that were starting. We looked around and we saw just something in the air that was exciting."
The group most credited for creating that air of excitement are the artists who have relocated to the city, particularly Jerry Beck, the owner of the Revolving Museum, who moved here last year from the Fort Point Channel area of South Boston.
"It's almost like a clique has been started in Lowell," said local developer John DeAngelis, who is renovating the Market Gallery Lofts. "They're building a new community here."
Faust, who has had a hand in several "artist live-work space" developments in the downtown area, points to the row of artist lofts on Dutton between Broadway and Market streets. "That was not a place to live for the last 10 to 15 years; the artists have made it an acceptable neighborhood," he said.
"The artists in many ways have made downtown an acceptable neighborhood," he said.
There is a danger the artists could become victims of their own success. The real estate boom driven by the artists' presence could boost prices beyond their means and force them from the area, which Beck said happened around the Fort Point Channel. Already, as Abrams said, some downtown gentrification is evident.
"Anybody who's doing a two-bedroom condominium and selling it for $200 to $225 per square foot is not doing it for artists," Faust said. "It's not a negative comment. There's a need for that stuff as well, but it's a funky unit disguised as an artist space and the person who's buying it is unlikely to be an artist."
Lowell city officials have programs in place meant to cultivate the local arts scene, including a downpayment assistance program offering artists loans of up to $5,000.
"We're pioneering still," Beck said. "A lot of these crucial decisions really have to continue to be supported by the city and by the developers and by the community itself."