Brick City Makes is a 1912 factory building in St. Louis’ Fox Park neighborhood that has all the fixings to be a small manufacturing hub. The five-story, 89,000-squarefoot building is structurally sound and isn’t plagued by environmental remediation needs. DeSales Community Development, a non-profit that has developed and managed affordable housing in Fox Park for over 25 years, acquired the building at 2528 Texas Avenue in 2016 and conceived the plan to renovate and subdivide it for occupancy by small and growing manufacturers.
The Fox Park building was built by a barber supply company and later owned by a hat manufacturer. It is mostly vacant today except for some office space on the second floor where about a dozen members of DeSales’ property management staff work.
“We had the opportunity to acquire the building for a very reasonable price and felt it was part of our mission to come up with a plan to restore it as a community asset,” said Tom Pickel, executive director at DeSales. “Our vision has been to restore the building for its original purpose, which is making things,” he said. “The City of St. Louis doesn’t need another manufacturing building converted to condos or self-storage. We need jobs.”
Brick City Makes is one block from a $20-million renovation project that is turning an old warehouse into a non-profit hub that will provide personal and career development services for women coming out of poverty. DeSales sold that site to the non-profit developer in November 2018, having acquired it in the same 2016 transaction in which it acquired 2528 Texas.
“They [the non-profit] told us early on that one of the reasons they liked the location was because of what we were planning to do with Brick City Makes,” said Pickel.
Pickel said that since the public announcement of Brick City Makes in 2017 DeSales has received strong interest from small businesses in leasing space in the building and being part of a community of manufacturers. So why has Brick City Makes failed to launch?
The first challenge was that potential lenders wanted to see a substantial portion of the building pre-leased. This created the classic chicken-and-egg dilemma.
“We have had great interest from potential tenants,” said Pickel. “But these are small companies that don’t have a 24-month time horizon. They are looking for something right now.”
The second blow came in 2018 when the census tract in which Brick City Makes is located lost eligibility for New Markets Tax Credits. “As a CDC, we’ve become a victim of our own success,” said Pickel. “Loss of the New Markets about doubled our funding gap.” That gap now stands at about $5 million of a $13-million development budget. The balance of the Brick City Makes capital stack includes state and federal historic tax credit equity, bank financing, and owner equity.
Closing that gap in the capital budget has proved to be the project’s biggest challenge. Pickel said that despite having received many encouraging words for the concept of Brick City Makes, DeSales has so far not been able to secure the public, private, or philanthropic support needed to make it happen.
“We have come to realize that we need a partner, sponsor, guarantor who believes in this project as much as we do and is willing to stand by us to make it succeed,” said Pickel. “We are a small organization and we simply cannot take on the risk of a project like this by ourselves.”
By May of 2019, having owned the building for more than two years and funded planning and predevelopment costs of Brick City Makes, DeSales faced the critical decision of whether to persevere or sell the building. “In a purely financial sense, the best thing for us definitely is to sell the building,” said Pickel. “We walk away with a nice bit of cash and none of the risk of developing the project.”
Still, he will have regrets if that were to come to pass. “We believe that our vision for Brick City Makes as a community economic asset is the right future for this building, for the neighborhood, and for the city,” he said. “But if we can’t marshal the resources, it can’t happen.”
In August of 2019, DeSales listed 2528 Texas for sale.
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This case study was originally published by Urban Manufacturing Alliance in 2019 as part of “All About the Jobs: Eight Mission-driven Industrial Developers on How Their Spaces Anchor Manufacturers and Support Local Economies,” a project developed in partnership with Local Initiatives Support Corporation (LISC) and students at the Albany Law School Community Development Clinic.