Tax incentives, public investments fueling Providence-area apartment projects

Jul 21, 2016 | News

PROVIDENCE — ASH NYC, developer of the Dean Hotel on Fountain Street, is planning an Aug. 1 opening for its stylish new apartment/retail building downtown in a historic building at 32 Custom House St.

The residential conversion project has created 10 apartments and one ground-floor retail space, which will be a Knead Doughnuts shop.

The elegant, modern apartments, with rents set at the high end of the Providence market ($1,795 to $3,100 per month) are among more than 1,000 new apartments planned, under development or recently opened in the Providence area, in part thanks to tax incentives or other public investments made this year (see chart).

Earlier this year, the state Division of Taxation approved $482,000 in state historic tax credits for 32 Custom St., a 25-foot-wide, 100-foot-long, five-story building, first constructed in 1875. The total project cost is $3.5 million-$4 million. The owners also have a tax stabilization agreement with the city. The former office building, located next to the Pot au Feu restaurant, once counted former House Speaker Gordon Fox among its tenants.

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One of the founders of ASH NYC, Ari S. Heckman, grew up in Providence and worked with Providence developer Buff Chace at Cornish Associates as a summer intern and for two years after he graduated from Cornell.

The Dean Hotel wasn’t his first foray into Providence real estate. Heckman started buying properties in the city in 2007 and 2008, and has redeveloped buildings in Olneyville and the East Side. Today ASH NYC specializes in urban design and renovation projects across the country. Heckman also has several other residential projects in the works for downtown Providence.

“I think particularly downtown, where there are only so many buildings … there is really strong demand … and pretty high barriers to entry,” he said. “There is a very deep reservoir of demand for apartments in downtown Providence.”

According to Barbara Fields, executive director of Rhode Island Housing, a normal rental vacancy rate is 7.5 percent. The national vacancy rate in 2015 was 6.7 percent, but it was 4.4 percent in Rhode Island, she said, and Providence’s rate is even lower.

Fields said it is difficult to separate the Providence numbers, because county measures are usually employed, but Providence’s vacancy rate is estimated at under 3 percent, and it may even be under 2 percent.

A study completed this year for Rhode Island Housing said at least 3,500 new housing units a year are necessary to keep up with anticipated demand, and most should be affordable for retirees on fixed incomes and millennials saddled with education debt. A $50-million housing bond that will be on the ballot this November is a first step, Fields said.

At 32 Custom House St., construction workers were busy last week finishing the apartments, which feature 14- and 15-foot ceilings, light oak floors, large windows that let in plenty of sunlight, and clean, polished lines. ASH NYC developed and designed the project in partnership with Kite Architects and the South Coast Improvement Company. The building was purchased in 2014 for $800,000.

Christine West of Kite Architects said each apartment design is a bit different. One of the penthouse units will have access to a private roof terrace. West said although much of the interior was altered over the years, the original bronze storefront is intact on the ground floor exterior, which will give the new bakery a vintage look. Also, Heckman said, “we really want to do a large scale mural on our giant side wall” and they are “just looking for the right partner.”

Click Here to read the article in The Providence Journal

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