Developer enlivens new business by giving old buildings second life

Lexington developer enlivens new business by giving old buildings second life

Herald-Leader columnistJanuary 20, 2013 

When Chad Needham moved back to Lexington after a few years away working in corporate marketing, he started a pizza company. Then he recognized another business opportunity all around him.

He noticed that older neighborhoods he had become familiar with while attending Bryan Station High School and Transylvania University were changing, and for the better. People were beginning to renovate classic, old buildings as places to live, work and play.

So, in 2009, the entrepreneur bought the old Spalding's Bakery building at East Sixth and North Limestone streets. It stood across from the recently renovated Al's Bar, which had become a popular hangout for young people interested in live music, poetry readings and good bourbon.

Needham gave the circa-1880 bakery a complete makeover, using its historic fabric, salvaged antique wood and adding some contemporary twists. The building is now leased to Arcadium, a bar featuring "vintage" arcade games.

He then turned his attention across the street to the liquor store, which was not exactly an asset to the neighborhood. After renovating that building, he leased it to the young founders of North Lime Coffee & Donuts and artist John Lackey.

Needham then took on a dilapidated Victorian house down the street. Meanwhile, others were doing similar work along the North Limestone corridor, including Brokenfork Design, Griffin VanMeter and Marty Clifford.

Needham has moved closer downtown for his seventh and most challenging project: a pair of early 1800s houses on Constitution Street that he plans to rent as offices.

"The Spalding's Bakery was really bad, but this is worse," Needham, 40, said as he took me through one of the houses and described how it had suffered from squatters, a fire and a long-leaking roof.

"These are the classic worst properties in good neighborhoods," he said. "But they have a great character about them. You try to keep the good old and get rid of the bad old. And the bad old is usually the newer stuff that was added."

He plans to have the first house finished by April. The former Transylvania soccer standout already has a lease signed for it with the Kentucky Youth Soccer Association, which is moving its office there from Chevy Chase.

"It's going to be a cool office," he said. "Essentially, a new structure within an old one."

Needham is saving original doors and woodwork where possible. But the houses are getting new roofs, plumbing, heating, air conditioning and interior insulation, except where interior brick will be left exposed. Much flooring must be replaced. In one house, a new staircase is being built from reclaimed heart pine lumber salvaged from an old tobacco barn.

His business model requires that he buy old buildings cheaply and carefully watch his renovation costs, he said. He self-finances building purchases, because bank financing is rarely obtainable for a project like this until it is finished and leased.

Except for the Victorian house, which he sold, Needham has retained his other renovated buildings as commercial property. Rental income helps him finance future projects.

"The challenge of this business is that it takes a lot of money up front and it takes a lot of time," he said. "And you have to do a lot of the work yourself. If I were to hire contracting companies, I don't think on the other side that I could keep rents affordable."

Needham works alongside his crew, which often includes his father, Phil Needham, who at age 71 is a competitive bicycle racer. A veteran Thoroughbred breeder, Phil Needham bred Mine That Bird, a gelding that won the 2009 Kentucky Derby as a 50-1 shot and went on to finish second in the Preakness and third in the Belmont Stakes.

"I've got a good crew, and what we can't figure out we'll subcontract out," Chad Needham said. "I enjoy this process. It's a creative process. I try to make each one as good as it can be, but you've got to figure out where to stop."

He said his venture has been modestly profitable so far and is allowing him to create assets that will generate long-term income for his family, which includes wife Denise, a dressage horse trainer, and daughter Bella, 5.

"You really end up with a new building that has a lot of character," he said. "But I couldn't do this without the end-users. Everything I've done has found a customer."

Needham also said he gets a lot of personal satisfaction from the work.

"I like giving these great old buildings a second life and seeing the area turn around," he said. "It's a nice feeling to keep investing in a neighborhood where I had fun times when I was at Transy.",

Tom Eblen: (859) 231-1415. Email: teblen@herald-leader.com. Twitter: @tomeblen. Blog: tomeblen.bloginky.com

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