Renovating Mixed Use Buildings in Newburgh

Posted in Commercial Real Estate Trends | Last Updated October 29, 2019

 

John Bonhomme owner/developer in the courtyard area of his 2 Liberty Street property, a mixed-use building

A young real estate investor with a soft spot for mixed-use properties invests in Newburgh

A lot is happening on both the Liberty Street and Broadway Corridors of Newburgh, especially in terms of mixed-use commercial real estate development.

Restaurants like the Liberty Street Bistro have expanded, and shops like Cream Newburgh, Cream Vintage, Oliver and Chatfield, and Field Trip have continued a retail expansion southwards, down Liberty Street.

The expansion is now moving all the way to a new retail/restaurant space located at 2 Liberty Street.

This newly renovated property is located at the intersection of Liberty Street and Renwick and is owned by John Bonhomme.

John’s a real estate investor with a soft spot for mixed-use properties AND Newburgh.

2 Liberty Street is situated at a vantage point with a view to the Hudson River and also a view toward the beginning of Washington Heights.

The Heights is a neighborhood in Newburgh that features beautiful and affordable Victorians and bowfront duplex row houses.

To see #2 Liberty Street’s detailed property listing, click here

 

Washington's Headquarters located in Newburgh's east end historic district is an attractive recreational feature in Newburgh's resurgent Liberty Street Corridor completing the 3 legged stool of Live Work Play

Washington’s Headquarters located in Newburgh’s east end historic district is an attractive recreational feature in Newburgh’s resurgent Liberty Street Corridor.

So, what is mixed-use commercial real estate development?

Mixed-use developments according to the MRSC, are “developments (that) contain a complementary mix of uses such as residential, retail, commercial, employment, civic and entertainment uses in close proximity – sometimes in the same building.”

These developments are pedestrian-friendly and encourage walkability within and between city neighborhoods.

With thoughtful zoning focused on proper density, a city can not only foster community it can also encourage economic development by setting policy that is favorable to mixed-use commercial real estate.

Newburgh launched a 2015 rezoning initiative to encourage mixed-use and live/work development

A reassessed code: becoming a city of the future

The current Broadway and Liberty Street revitalization may not have happened had the City of Newburgh not revised its zoning code.

By recognizing national trends showing people were moving to liveable, walkable cities with amenities and community, the city decided to examine its own historic development patterns.

Newburgh has a tremendous inventory of existing mixed-use, and often architecturally significant commercial real estate.

This inventory includes mixed-use properties which developed organically through the manufacturing growth spurts in the 19th and early 20th century.

Simply, people needed places to both live and work (and – sure – play) locally at a time when cars did not move people across wide areas.

Building on the past

The city carefully considered that inventory as well as future development as it worked on planning.

It focused on emphasizing Newburgh as a liveable, walkable city with amenities and community.

Experts were called in, goals established and decisions were made about how Newburgh’s housing and commercial real estate stock, as well as future development, could best be positioned to align with national trends.

Ultimately, the experts involved (Including the Newburgh Community Landbank) recommended the city revise its zoning laws (it did in 2015) keeping these key goals in mind:

  • Create a range of housing opportunities and choices
  • Take advantage of already existing and future compact building design
  • Create walkable neighborhoods
  • Encourage distinctive, attractive communities with a strong sense of place
  • Preserve open space and critical environmental areas
  • Strengthen and directing development towards existing communities
  • Provide transportation choices

The zoning allows people who are interested in operating their businesses to both live and work at the same location.

The new zoning emphasized “Mixed Use” zoning regulations that allowed for both residential and commercial space to be situated in the same building, similar to the “Live/Work” zoning that was also permitted in the new rezoning regulations, but different in that the property owner need not live there.

Interested in learning more about the new zoning regulations? Check here.

Mixed-use properties as an investment strategy

Into the mix of Newburgh’s newly articulated vision walked investors like John Bonhomme.

John is a young man actively in pursuit of finding creative, new ways to build investments and make money, as well as make a difference in Newburgh.

He wasn’t keen on the rat race of corporate life, and after trying that career path, he moved into a job as a city cop but began moonlighting as an investor by renovating properties he purchased in Newburgh.

To date, John has over five mixed-use properties that he has renovated under his belt. They are mainly situated on Liberty Street in Newburgh’s East End Historic District.

The potential of the “T.”

John’s passion for Newburgh particularly focuses on the potential of the “t” as he calls it, which is Newburgh’s aforementioned two intersecting streets: Broadway and Liberty.

He sees those two streets as crucial to bringing in investors, shops, and patrons.

Notably, the area has a tremendous stock of mixed-use commercial real estate.

“When I went for both my properties on south Liberty, the south corridor of Liberty had not been established, the stores on Liberty near me, Oliver and Chatfield and Rob’s Roast, they weren’t established.

“So, I knew in order for Liberty Street to thrive, the south area had to develop. The entirety of Liberty Street needs to form.

“15 Liberty (Panja) when I got it was a dogfighting spot. After we developed it, it really started to change the nature of Liberty Street south towards Washington Heights,” Bonhomme explained.

BOM Newburgh Partnership starts a major live-work, mixed-use buildout

Arguably the properties John and others like him are renovating and bringing back to use have helped set the stage for the recent announcement of a major live-work development just off of Liberty Street, at 109 South William.

The even earlier buildout of Atlas Industries’ pioneering foray into Newburgh between South William Street and Spring Street must also be seen as foundational to anyone even considering the area.

In 2019 The BOM Newburgh partnership assumed ownership of the city-owned property: 109 South William Street in Newburgh. A $2.7 million redevelopment of the 100-plus-year-old building has ensued.

The project is called “Wireworks,” because the original occupants of the building manufactured springs for carriage cushions.

This trend emphasizes liveable, walkable cities with amenities and community.

Architectural rendering of BOM Newburgh LLC’s Wireworks Building, a Mixed-Use Development on S. William St

The first floor of the three-story building will offer a café with live/work artist studios. The second floor will be professional offices and co-working space, and the top floor will house seven apartments.

The partners in the venture are a team that includes Baxter, a Hudson Valley real estate developer/ general contractor; Mapos, an award-winning NYC architecture, and design firm; and Sisha Ortuzar, an award-winning NYC restauranteur and hospitality advisor who also lives in Newburgh.

The co-working space will be administered by Beahive of Beacon.

Investing in Newburgh

“I started looking for ways to not have to work the traditional 9-5, to avoid the rate race, I tried doing research, I tried the stock market, I didn’t fare so well, I decided to get into real estate,” said John.

“I started doing research, I looked at surrounding counties in New York Cities, I kept expanding that search, and looked for the magic for the highest rate of ROI (return on investment).

“In 2012 I found Newburgh. It offered the highest ROI,” John explained.

I calculated how much rent I could get vs. how much I’d be paying for the building. You then factor in expenses. I think at that time (2012) Newburgh apartments were going for about $800.00 a month so you would have three apartments for a total of $2400.00 and then subtract half of that ($1200.00) for expenses:

  • Utilities (heating, water, etc.,)
  • Taxes
  • Maintenance

Usually, it came out to half of the total rent roll. Then, I multiply that amount by twelve and divide that into the cost of the building.

Witnessing a changing Newburgh

165 Liberty St. John Bonhomme's first purchase in Newburgh

165 Liberty Street

“From 2012 until now there has been a drastic change, for the better,” John said. “The first building I ever bought was 165 Liberty a building north of Broadway on Liberty Street. The neighborhood was a little sketchy at first, but it quickly changed.”

“The building had been a dentist’s office. He had been in some kind of scandal and had to sell the building quickly. I was able to get in and I bought it for $80,000 and converted to a three-family, I put about $20,000 in it to get the first floor into shape.

“In 2013 I bought two other properties and rehabbed both of those, one on Little Monument and one on Carson.

“I really like that area, the Heights. And Little Monument is quiet, it’s hidden, some properties have views!”

After fixing up those two properties, John moved on to buy two properties from the city: #15 Liberty Street, and # 2 Liberty Street,

“15 Liberty Street, which was formerly Déjà Vu and is now Panja, is owned by Anousha Mehar. She’s doing fantastic work over there, involving the community, involved in activism, you name it she’s doing it.”

John’s purchase of 2 Liberty is his biggest venture in terms of renovation (and hopes) to date.

“I sold all the other buildings with the focus on just keeping this building. I made money on each of the sales, but every single dollar that I made has gone into this building,” he said.

“I was made multiple promises by various funders, banks, and various funding sources, but nobody delivered. No one, so I had to fund it myself.”

 

Rough hewn bar at 2 Liberty Street Newburgh, N.Y. A mixed use property

First-floor bar at 2 Liberty Street

John describes the building that he found as an incredible building, in terrible shape, but also a pivotal building in terms of location.

His vision was that a beautifully redone building with a quality anchor tenant on the first floor, could be a neighborhood beacon in an area full of promise.

There are many beautiful buildings near his property both single-family and mixed-use that, revitalized, would improve the neighborhood.

“When I came here, I don’t even think it was a building, it was just a set of bricks on top of each other. You couldn’t walk in, there was no roof it had collapsed,” John said.

He explained that from the first floor, as you stood, you could look up at the sky and at the same time look down at the basement.

Panja at 15 Liberty Street, John Bonhomme renovated the mixed use property

Panja Newburgh, 15 Liberty Street 

Workers came in and demoed the building, forming a line and carried out debris bucket by bucket.

His contractors worked all winter long doing the first phase of construction but then were called to the Liberty Street Partners project, 96 Broadway, which is now complete and opened as the restaurant, Mama Choux.

John Bonhomme senior and junior stand in front of 2 Liberty Street

John Bonhomme senior and junior stand in front of 2 Liberty Street. John senior has been a big help in the renovating of the mixed-use property

“I had to start taking some of the work on myself. I had the frame out of the building, and then I did insulation and worked with the glass company on Williams Street (Glassolutions) for the windows.

“Jeff Wilkinson (a noted local architect)  designed the building, he picked the materials, he is on the architectural review board, he knows what is required, and he has great knowledge about correct materials.”

In order to qualify for the historic tax credit, you must use historically accurate materials, and Wilkinson was a wealth of knowledge about that, according to John.

“Jeff drew the building, he decided how it would appear inside and out,” John said.

What made it possible from a structural perspective were two steel beams that kept the building (built in 1890) from completely collapsing.

“Jeff was excited when we asked him about the project. He agreed to take the project and he said it would be a lot of work, but said it was a crucial corner for the city,” John said. “We found him to be very helpful to us.”

Currently, one of John’s apartments is rented and he is looking for a tenant for the first-floor space which he has outfitted with a nicely designed bar.

One of the other apartments remains available as of late October 2019.