Keystone Construction helps downtown condos get a 2nd chance at makeover
Klaus Wittern came close to renovating the run-down Shelton apartments into condominiums in late 2007.
He had lined up contractors, architects and a bank to finance the nearly $3 million project for the 1925 building at 825 N. Delaware St. Then a recession struck, and his plans fell apart.
“Six days before closing, they pulled their financing,” he said of his lender.
Three years later, Wittern is back, with a new bank lender, a private equity investor and most of his former partners. He has persevered through one of the worst downturns the commercial real estate industry has seen.
“It’s been an emotional roller coaster. I truly owe a lot to all the folks who have stuck with me,” Wittern said, sitting on a stack of drywall inside the Shelton, a five-story, brown-brick building that is finally getting its promised second life.
Contractor Keystone Construction is well under way in building 15 condo units in what had been a 50-unit low-income apartment midrise. Wittern, a solo developer from Indianapolis who bought the Shelton in 2006, has presold six of the units, which range from $139,000 to $227,000, except for two top-floor penthouses that top $300,000. (Wittern has bought one of those.)
The project, opening in July, comes online at a time when demand for condos is low, but few new competing projects are out there.
“It fills a nice niche in the Downtown market,” said residential broker Kurt Flock, of Flock Real Estate Group. “It’s not going to sell out overnight, but I think he should do well. If you’re under $250,000 and you’re in the Downtown market, you’ve got a reasonable chance of enjoying some success.”
Wittern said it took him 18 months to find a new bank to replace the one that pulled out. Even then, his new lender would put up only about 35 percent of the project’s $2.6 million cost. He turned to a longtime out-of-state business partner to fund the rest. “He’s actually my saving grace,” Wittern said of his partner.
Wittern was lucky to find a bank willing to lend anything, said Steve LaMotte, a senior vice president at the CB Richard Ellis commercial real estate firm in Indianapolis.
“The number of banks willing to do condo financing today in Indianapolis is very short,” LaMotte said. That’s because banks know all too well that the residential market is overbuilt, with the supply of new and used units outrunning buyer demand, he said.
To help his sales efforts, Wittern has stuffed his condos with upscale touches, including granite countertops, hardwood flooring, full-tile showers, balconies or patios, and a shared rooftop terrace.
“When you add all the little things here you don’t get elsewhere, I think it gives us a big competitive advantage,” he said.
Wittern also brought in a sound engineer to help design virtually soundproof units, since one of condo buyers’ biggest complaints is hearing annoying noises from their neighbors.
That led to Wittern spending an extra $40,000 on floor treatments, including sound-deadening mats; putting in double walls between units; and adding special touches such as packing putty around light switches and outlets.
The “putty packs” are an idea borrowed from recording studios, said the sound engineer, David Wright, who visited the building last week to check on the work.
Wittern said he’ll promote the building’s soundproof design as one of its selling points.
Designed by a mechanical engineer who worked for famed architect Frank Lloyd Wright, the building features slanted, octagonal ceilings that Wittern has retained. There’s also a concrete-and-brick spiral staircase that’s still in use.
Wittern’s architects designed sliding pocket doors in many places to reduce the amount of dead space in the units.
