DEVELOPERS GRASP LOFTY DREAM WITH DOWNTOWN REHAB

By THOMAS ADAMS
Rochester Business Journal
March 2, 2012

The last of 19 condominiums at 1 Capron Street-all of which are spoken for-will be ready for occupancy in June, with the recently opened Nikko restaurant on the first floor expected to be profitable in its first year, owners said this week. The completion of the final six units of the Capron Street Lofts marks the culmination of a five-year redevelopment of a warehouse built to store goods that were shipped along the Genesee River and the Erie Canal. Ten of the 19 condos, ranging in price from $159,000 to $339,000, were sold in the last 12 months.

"The most interesting thing about all of this is that we had to sell through a lot of objections from the buying public," developer Patrick Duffon said this week. The five-story building faces the South Avenue on-ramp to I-490 and is surrounded by barren side streets. Duffon describes the view as "a beat-up streetscape, an unfinished building with no curb appeal whatsoever, no trees in sight, no updated street lighting." "There's nothing, really, from an exterior standpoint," he said. "We had to sell through all of that stuff. We didn't have any type of completely finished model units for our buyers to look at, and still we were able to sell units."

The extended view, however, includes the river, the Frederick Douglass-Susan B. Anthony Memorial Bridge and several landmark downtown structures. Stephen Golding, manager of downtown development and neighborhood and business development for the city of Rochester, is pleased with the Capron Street development. "It's a beautiful space," he said. "We're really happy with it. If you walk around that area, it reminds you of what's left of the old part of the city, with the buildings right up to the narrow streets. It has a lot of potential to grow into a nice little neighborhood. "Longer term, the city would like to see more mixed use of the buildings down there, maybe more conversion of some of the older buildings to commercial retail and residential."

The Capron Street Lofts, a $5.2 million project, began with the purchase of the vacant 40,000-square-foot warehouse by Belmont Properties Inc. in 2006 for $600,000. The upper four floors are roughly 7,000 square feet apiece, with four condos on the fifth floor and five on each of the three floors beneath it. Construction began in August 2008. Two months later the economy went into an extensive tailspin.

"We had our construction financing and were ready to build," Duffon recalled. "However, as a result of the recession, there wasn't a bank in the land that was willing to provide a mortgage for new condominiums. "While we were ready to go, and our buyers had interest, people just couldn't get financed for new construction condominiums."

Developers considered marketing the units as apartments because of the mortgage issues, Duffon said. The economic crisis eventually eased enough to free up mortgage financing. "The real tipping point came when we had some of our earlier loft units fully finished and being lived in," Duffon said. "People could look at what was going to become here, and sales just dominoed. That was about seven months ago. People saw the finished product and loved what they saw."

Duffon and his wife have purchased a condo and plan to move in this year. "I've always been planning to move in, if the timing was right," said Duffon, a city resident. "To put my stamp on this project by also taking ownership here speaks for my belief in the product. "I'm going to be living with all the owners that bought from us. A lot of developers have discouraged me because people come to you with complaints, if there are any complaints. But I'm confident that what we're doing is right from a development standpoint and from a building standards standpoint."

The ownership group comes from the suburbs and from the city, Duffon said. They include empty nesters, young professionals and families. "We were able to achieve all of our sales prior to the streetscapes being fully finished," Duffon said. "I think that's a testament to the interest in downtown Rochester-from a living standpoint, the interest in owner-occupied housing downtown and the interest in this neighborhood. "It was a leap of faith by all 20 of our buyers, including Nikko."
Nikko opened in December and held a February grand opening. Mark Chiarenza, co-owner of Murphy's Law pub on East Avenue, is Nikko's managing partner. Marco Muoio is general manager. Nikko offers New American and sushi cuisines. New American cuisine, developed in the 1980s, is a twist on traditional dishes. "It is classically rooted techniques flavored with modern technology to create a new twist," Muoio said.

Executive chef Jeremy Nucelli prepares offerings such as char-grilled Spanish octopus, sake-steamed littleneck clams, slow-roasted pork belly and the Nikko burger. Sushi chef Ching Imperial Bolima, who came to Rochester from Miami, prepares sushi rolls, sashimi and nigiri. "We're taking almost a Mediterranean approach to the sauteed foods," Muoio said. "We've used that as a cornerstone for building the menu." The restaurant seats 65, the bar, 13.

"We couldn't be more pleased with the results," Muoio said. "The special thing has been people's reactions to what we're doing. We wanted to create something different for Rochesterians, something that you'd find in a larger market." Most of the business comes from people who live or work downtown, he said, "but as the weeks go by, we've been pulling from the suburbs too. "Everybody that comes through here is enamored with the space itself and the fact that we saw the potential to do a project in kind of a tucked-away space. It's all part of the revitalization of downtown." "The restaurant is currently profitable, after three months in business," Duffon said. "We haven't done any advertising. At this point, it's word of mouth that is carrying the brand around town."

In addition to Nikko and the Capron lofts, the Washington Square District is benefiting from the $2 million renovation of a four-story warehouse at 250 South Ave. into apartments and commercial space. Opened in October 2008, it was the first residential development in the neighborhood. All three of its apartments are rented.
Duffon and others involved in Washington Square activities are awaiting word on a study commissioned by the city of Rochester that could result in St. Paul Street and South Avenue to the west and N. Clinton and S. Clinton avenues to the east becoming two-way streets.

"If this part of South Avenue becomes two-way, there really isn't a need for this (I-490) on-ramp," Duffon said. "The folks around here are talking about doing some type of decorated, elevated park. "We've already had a site plan put together for something like this. For homeowners and people who have dogs, it's a great place to potentially come." Two-way streets would allow north-bound traffic from the South Wedge to reach Capron Street, Duffon said.

Residents, businesses and organizations are working together to form the Washington Square Neighborhood Association. They include Geva Theatre Center, St. Mary's Church, Excellus BlueCross BlueShield and Dinosaur Bar-B-Que, Duffon said. "Now that this project is finishing up, I think you'll see confidence in this part of downtown," he said. "We're talking about owners, people who are committed to living here. This is their home long-term."

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