Developers Find New Uses for Holyoke Properties

Community Spotlight

Denis and Marco Luzuriaga

Denis and Marco Luzuriaga say more than 200 people have already expressed interest in the 18 market-rate apartments they are building on the upper stories of the Cubit building downtown.

Marco Luzuriaga and his brother Denis are betting on the future.

To be precise, that’s the future of Holyoke, a city where years of disinvestment led to vacant buildings with major environmental challenges that squashed any interest developers had in investing in them.

But a slow evolution has occurred over the past few years, and the landscape is undergoing marked change. The combination of Mayor Alex Morse’s proactive stance, support from the City Council, and work by other officials led to the creation of an urban-renewal plan four years ago that is finally coming to fruition.

Notable progress includes a focus on the Innovation District; the establishment of the Massachusetts Green High Performance Computing Center, a $165 million academic research facility between Cabot and Appleton streets that overlooks the first-level canal; major infrastructure investments; a growing number of artists and art venues; and other measures such as tax credits designed to spur revitalization and attract people of all ages.

When they realized the potential the downtown held and saw energy in the area increasing, the Luzuriaga brothers told BusinessWest, they made a decision to get in on the ground floor of the rebirth in both a literal and figurative manner.

Marco is an IT professional who lives in Maryland and was thinking about a career change, and his brother is a Holyoke artist. They decided to join forces, and after undertaking a feasibility study of the former Cubit Wire & Cable Co. Inc. building at 181 Appleton St., they purchased it for $325,000 and took on a challenge unlike anything they had ever imagined.

“But the amount of open space here in Holyoke is unparalleled, and we have seen a similar pattern of success in places like Soho and Jersey City, where artists moved into an area and they became vibrant, artistic communities,” Marco said, pointing to Gateway City Arts, the Canal Gallery, independent art studios, the Canal Walk, the computing center, Holyoke’s new $4.3 million rail platform, and other major projects within walking distance of the Cubit building, where their $5 million renovation will soon be complete.

The bottom floor will become home to the MGM Resorts HCC Center for Culinary Arts at Holyoke, while the two upper floors will be loft-style, one- and two-bedroom apartments with enormous windows and sweeping views of the area. In addition, the Luzuriaga brothers purchased three vacant lots that abut the Cubit building and will be used for parking.

“The Center for Culinary Arts will double the college’s prior teaching capacity and provide no-cost culinary training to 50 Holyoke residents every year, serving as a career pipeline into jobs from entry level to senior management in a top-employing industry of our region,” said Morse, adding that students are expected to start classes there next spring.

He added that the city has worked with developers and businesses to create solutions for some of its most challenging sites, and these efforts are yielding concrete results, with more than $100 million of investments in the pipeline.

Mayor Alex Morse

Mayor Alex Morse says the renovation of the Cubit building will provide more downtown housing and become home to the MGM Resorts HCC Center for Culinary Arts at Holyoke.

“We’re creating an environment that people want to be part of and are trying to reach the tipping point by putting together solutions for the most challenging sites,” Morse told BusinessWest.

Marcos Marrero, the city’s director of Planning and Economic Development, noted that, although vacant storefronts and shuttered buildings had become part of the downtown landscape and space ready for businesses to move right in is scarce, the situation has undergone a significant change.

“Our downtown is a different place than it was four or five years ago due to the availability of commercial space and opportunities to live and work here,” Marrero said.

Indeed, four major projects are underway, and interest and enthusiasm are exploding. “We have 200 people on a waiting list for the 18 apartments we are creating in the Cubit building,” Marco Luzuriaga said, noting that the list was created thanks to a Facebook posting about the new units, which will rent for $1,000 to $1,400.

For this, the latest installment of its Community Spotlight series, BusinessWest takes an in-depth look at Holyoke and the investments developers and businesses are making in the Paper City that will help shape and create a long-awaited and exciting new chapter in its history.

Repurposing Blighted Buildings

The Parsons Paper Co. facility, which was built in 1853 at 84 Sargeant St., was one of the most challenging properties in the city. The contaminated complex was abandoned in 2004, and in 2008 a fire caused extensive damage. Four years later, the city officially foreclosed on the property and took ownership for failure to pay taxes.

Aegis Energy Services Inc. is located next door to the old mill, and when the company expressed interest in the 4.7-acre site due to its desire to expand, the city did everything it could to make the cleanup and purchase possible.

“The Parsons site was one of 10 key areas that were designated as priorities for redevelopment in our 2013 Urban Renewal Plan,” said Morse. “Significant legal, environmental, and financial constraints had impeded progress for years, so we jumped when Aegis told us they were willing to entertain the idea that we would leverage resources to do the $3.6 million environmental cleanup that was needed.”

The work began last March thanks to funding from multiple levels of government, two private companies, and the involvement of every public corporation in the city. Although the majority of the 350,000 square feet of manufacturing space was demolished, Aegis was able to preserve about 40,000 square feet in one section of the structure.

In addition, the city provided Aegis with the most aggressive tax-incentive schedule in its history: a 100% property tax exemption for 10 years as a way to finance a $400,000 portion of the site cleanup costs.

“The financing framework for this project is probably the most complex that Holyoke has seen in decades,” said Marrero. “But the implications a year from now will be significant — blight reduction, building reuse, job creation, expansion of manufacturing, more renewable energy, and improved property values in the neighborhood.”

Aegis plans to do a major renovation to suit its manufacturing needs, which will allow the company to expand its footprint by 200% and almost double its workforce with the addition of 30 new jobs.

However, the project is being undertaken in stages. After the cleanup was complete, Aegis created a 2.5-megawatt solar farm on a portion of the acreage to help pay for its expansion. Holyoke Gas & Electric entered into a power-purchase agreement with the company, and the electricity is being used by property tenants of the Holyoke Housing Authority.

Progress will also soon be visible at 37 Appleton St., which was the second-largest vacant, blighted building in Holyoke. In the past, the site was home to businesses that included Worthington Compressor and the American Dream Modular Home manufacturing company.

Recently, American Environmental agreed to buy it from the city for $1 from the city’s Redevelopment Authority with the agreement that the company would undertake the $600,000 cleanup of the brownfields site.

“We’re about to close on the sale of the property,” Morse said, explaining that it will allow American Environmental to expand and add 50 new jobs.

There are also plans underway to reuse the third-largest blighted and vacant building, the former Farr Alpaca building at 216 Appleton St., for housing.

 

Our downtown is a different place than it was four or five years ago due to the availability of commercial space and opportunities to live and work here.”

 

Winn Development has partnered with the city’s Redevelopment Authority and forged an agreement to renovate the building and turn it into approximately 100 apartments. The company is hoping to get approved for historic tax credits, and if all goes well, Morse said, the estimated $38 million renovation will help fulfill the goal of creating dense housing downtown that will make it a safe, livable place for people of all income levels.

A $34 million rehabilitation of the 18-building Lyman Terrace public-housing complex also began last year. The buildings contain 167 units, and the first phase of work included excavating and building new roads and sidewalks, and installing new water and sewer lines and street lighting.

Morse said improvements to the housing units began this year, and he noted that the project is an example of how the city works closely with residents to respect and meet their needs.

When he took office five years ago, there was talk of demolishing the complex. But people had strong feelings about keeping the historic structure in the heart of downtown. As a result, the Housing Authority decided to renovate it, and after they held a number of public meetings, they were able to integrate recommendations made by residents into the final design.

“The residents had input on every part of the process,” said Morse. “The project is a real partnership that led to a great outcome, and has become a model to think about the way we do projects in the future.”

Another development that sparked controversy was the use of an 18-acre parcel on Whiting Farms Road. It sits across the street from a residential neighborhood, and although Lowe’s and Walmart had looked at the site, neighbors had objected to having a big-box store built there.

“We shepherded the use of the property, reset the conversation in a similar manner to Lyman Terrace, and talked to the residents to get input about what they wanted as well as the city’s goals and how we wanted to accomplish them,” Morse said, adding that the public meetings played an important role in determining a new use for the land. “If you want growth to take place, it needs to be possible, but you also need to build a sense of public support and common ground.”

The model worked well, and the City Council voted for a zoning change to allow Gary Rome to build a new, $10 million Hyundai dealership on 10 of the 18 acres. It opened last October, is the largest of its kind in the country, and led to the creation of 50 new jobs.

Collaborative Efforts

Economic development is also taking place in other areas of the city, including a $21 million project underway at Ingleside Square near the Holyoke Mall.

The former Holiday Inn is being replaced with a Fairfield Inn by Marriott, which will be completed this year. Half of the old hotel was demolished, the remainder is undergoing a major rehabilitation, and the remaining section of the footprint has been turned into pad sites for restaurants or retail stores.

“It’s the first time the city pre-approved a permit to help secure tenants,” Marrero said. “We worked with the developer and visually approved their site plan.”

So far, an Applebee’s and Chipotle have been built there, along with a Vitamin Shoppe and a stand-alone McDonald’s.

One pad site remains, and the mayor said it is a great example of what can be done with an underutilized property.

“For many years, the property was regarded as a homeless hotel because the state used it to house homeless families,” Morse noted. “But it is a prime piece of property located off of I-91, and in addition to creating at least 200 jobs, this reuse will result in hundreds of thousands of dollars in new tax revenue.”

Other projects in the pipeline include a new Easthampton Savings Bank branch, and redevelopment at the corner of Hampden and Pleasant streets with a planned Dunkin’ Donuts and an additional 2,000 square feet of move-in-ready retail-commercial space.

Morse said job growth continues to take place, and the city’s unemployment rate is 4%, which is the lowest it has been in 17 years.

“We certainly have more to do, but the wheels are constantly in motion,” the mayor told BusinessWest. “There is still plenty of vacant space in Holyoke’s historic mills. We also have the cheapest and cleanest energy source in New England, plenty of water, and the assets to continue filling our core with economic opportunity. Holyoke is increasing opportunity for its residents and strengthening its presence as an economic hub in Western Massachusetts.”

 

Holyoke at a glance

Year Incorporated: 1850
Population: 40,684 (2016)
Area: 22.8 square miles
County: Hampden
Residential Tax Rate: $19.17
Commercial Tax Rate: $39.72
Median Household Income: $37,372 (2015)
median Family Income: $40,559 (2015)
Type of government: Mayor, City Council
Largest Employers: Holyoke Medical Center; Holyoke Public Schools; Holyoke Community College
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