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Atlanta Journal-Constitution, The (GA)

May 23, 2005 Section: Horizon Edition: Home; The Atlanta Journal-Constitution Page: E1

Horizon profile: Miller-Gallman Developers: Turning old new? Ask experts Intown loft pioneers 'found niche market'
DAVID PENDERED The crackle of development along Atlanta's proposed Beltline is a sweet sound to two pioneers of the loft movement who built a trio of successes near the old rail line. Jerrold Miller and Bruce Gallman converted about 4 acres of blight near Atlanta's City Hall East into three residential projects -- Troy Peerless, Glen Iris and Ponce Springs. The first two developments are almost sold out, and Ponce Springs opened this month with brisk sales. Now Miller-Gallman Developers is poised to add a consulting arm. The aim is to advise other residential developers about the potential for adapting and reusing the innumerable old buildings that flank the Beltline and dot the inner city. Atlanta seems to have a high number of condo buyers who want to live in retooled manufacturing plants. "If you're accustomed to building on a clear lot, it's a 180-degree change to rethink the development if there's a historic structure on it," Gallman says. "You have to think about incorporating the historic structure, or redoing the historic structure into something that's new from the ground up." Modifying old factories is a challenge for both technical and political reasons. One current controversy in Atlanta involves the Masquerade nightclub adjacent to the planned Beltline in the former DuPre Excelsior Mill and within sight of MillerGallman's lofts. Most of the Masquerade was to be torn down to make way for nearly 200 condos in a midrise building. Developer Larry Wolfe said there was no way to save much of the Masquerade and still build a project with enough density to make a profit. Neighborhood residents took action in February and persuaded Atlanta's historic preservation agency to save the old mill, at least into this summer. Wolfe now is trying to devise a plan that would save a large portion of the building and still provide high density. Miller and Gallman declined to talk about the way the Masquerade was handled. But the case does illustrate the nettlesome nature of intown development, and is widely seen as a precursor of debates over the fate of old buildings in established neighborhoods along the Beltline. "The natural inclination is to maximize density, because that's how you make the most profit," Miller says. "As soon as you rezone to high density, you've made a profit. Atlanta has a long history of land speculation. The danger is that we speculate on high density at the sufferance of building what's compatible with the surrounding neighborhood." Miller-Gallman formed in 1995 when its founders decided to collaborate on retooling Troy Peerless from a shuttered hand laundry built in 1927 into 35 residences. Both had interest and experience in rehabilitating old buildings. Gallman, for instance, put Castleberry Hill on the map in the 1980s by retooling an old industrial district into an artists colony south of the Georgia Dome. Miller recast the historic Healey Building in Atlanta's central business district into residential condos. A decade ago, construction loans were hard to get. All the smart money was being invested in suburban subdivisions and power centers. Lenders were not eager to plow money into speculative intown loft conversions. "The loft developers downtown . . . borrowed on their credit card because there wasn't any kind of loan program available," says Jim Mynatt, who retired as a senior vice president after running SunTrust Bank's then-nascent lending program for loft conversions. "They were pioneers who deserve a lot of credit, because they found a niche market." Miller and Gallman credit SunTrust for providing construction loans that spurred their business and the overall trade of loft conversions. Mynatt says he oversaw a loan program with a total of about $50 million that provided financing for three to

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five years. As one loan was paid off when the development was refinanced, money was made available for another project. The two developers also tapped into sources of cash that were not commonly used at that time. They used tax credits available for historic rehabilitation as a carrot to encourage mom-and-pop investors to provide loans as small as $30,000 each, Miller says. It took a lot of negotiating to create the $15 million needed for the second phase of Glen Iris Lofts. The small-cap nature of the company is a minor reason Miller-Gallman hasn't strived for larger developments, Miller says. A bigger reason is Miller-Gallman doesn't want to build the high-rises that have become the core business of another pioneer of Atlanta's loft movement, Jim Borders, president of Novare Group. Novare hit a home run with the Metropolis in Midtown and has high-rises in downtown, Midtown and Buckhead. The company, founded in 1992 to do adaptive re-use, says it has more than 3,500 condo units in development in the Southeast. "I don't see us going in the directions of Borders, doing megaprojects all over the Southeast," Miller says. "I'm not interested in building megacomplexes. We're just more interested in building things more compatible with neighborhoods and contributing to the fabric of neighborhoods." By way of comparison, the Miller-Gallman project near City Hall East has about 250 units. The Metropolis, twin towers near the Fox Theatre on Peachtree Street, has twice that number. Gallman, who describes his developments as artistic paintings, says Novare is building good developments. But they're not his cup of tea. "We want to have buildings that create a mini-neighborhood, not a mini-town," Gallman says. "Places where you get to know your neighbors. . . . "The people who move into these types of developments are creative thinkers who enjoy the interaction in a place that's not like a huge apartment complex." Photo COLIN OWENS / Special Bruce Gallman (left) and Jerrold Miller pose at Ponce Springs, their latest loft project success. Photo COLIN OWENS / Special Jennafer Cohrs and Bart Susany, standing in the kitchen of a model Ponce Springs loft, read details on the residences while taking a tour. Photo COLIN OWENS / Special Candles accessorize a glass coffee table in one of the decorated model lofts. Photo COLIN OWENS / Special Potential home buyers (left photo) mingle in the courtyard of Miller-Gallman Developers' latest project, Ponce Springs Lofts at Glen Iris, during the opening gala May 12. Sales already have been brisk.

Copyright 2005 The Atlanta Journal-Constitution

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