Historic buildings on North Phillips Avenue will be rehabbed by new owner

SIOUX FALLS — It took decades to transform North Phillips Avenue from scrap metal yard to a haven for hipsters and commerce.

Now two historic buildings on Sixth Street have changed hands, with plans to rehab the last vestiges of the dark days for the downtown corridor.

Craig Markhardt has purchased The Albert House and Andrew Kuehn Grocery Warehouse buildings in a deal that took three years to complete.

Markhardt is a real estate investor and downtown resident with a passion for rehabbing historic structures.

While there are still plenty of hurdles to overcome with the city before plans are finalized, Markhardt said he’s committed to maintaining the character of the neighborhood.

“They’re what’s known as heirloom buildings, which means they are so important to a community, that they’re part of the DNA,” he said.

Both buildings were purchased from Legacy Developments, which acquired the property in 2015. The deal includes an apartment building on West Madison Street.

The Albert House, at 333 N. Phillips Ave., was for many years a rather run-down hotel with a less-than-stellar reputation. Legacy remodeled the rooms and converted them into apartments.

The Kuehn building houses the L’Abri Apartments, which are subsidized housing units.

The purchase took nearly a year to close because it required approval from the U.S. Department of Housing and Urban Development, said Ron Nelson, a commercial real estate agent who brokered the deal and is a minority investor.

HUD is careful about making sure that the owners are able to maintain the commitment to subsidized housing. While complicated, it’s because they are stewards of the public’s money, Nelson said.

“Doing a transfer to new owners with HUD is not for the faint of heart,” he said.

The main levels of both buildings have potential for commercial or office space that fits the character of North Phillips, said Markhardt.

Remodeling will start with the Keuhn building, 401 N. Phillips Ave., which was built in 1902 as a grocery warehouse. It was converted to apartments in 1980.

“First we are going to gut everything and expose it down to the timber and Sioux Quartzite construction and then look at how we can move forward,” he said.

Markhardt also plans to create a new entrance to the main level on the north side that is ADA compliant to make the main floor more accessible.

There is also a full basement that once included a bar. It’s possible that it would be a good space for a lounge of some type, he said.

“We are going to be looking for some high-quality tenants for the Keuhn building right off the bat,” he said.

The main level of the Albert House also will be redone.

Markhardt is a Mitchell native who started his career as a plumber before college, working primarily in old buildings.

He was a mortgage broker before moving into real estate full time. He’s been investing in property for about 20 years.

Markhardt said he’s been meeting with staff at the Old Courthouse Museum and understands the restrictions of working in historic buildings. He said he has a habit of making wholesale changes while respecting the structural character and integrity of a building.

“I know how challenging it is renovating older properties,” he said. “I have a keen eye for detail. I intend to bring quality improvements to these buildings that will last multiple generations.”

But, he stresses, plans are in the early stages. Markhardt wants to get input from architects who are interested in the project and would love any photos that people may have of the interior of either building.

“I’m excited about being neighbors to the Orpheum (Theatre). I’m excited about being neighbors to Jones 421 building as well,” he said. “Everything that we do will be complementary to the neighborhood.”