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Demolition starts for $250M mixed-use makeover of Poughkeepsie hospital

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A former psychiatric hospital in the town Poughkeepsie that has been closed and decaying for 15 years could soon be transformed into a $250 million mixed-use development.

Joint developers EnviroFinance Group LLC and Diversified Realty Advisors LLC held a kick off ceremony on July 13 for the redevelopment of the 156-acre Hudson River State Hospital site off Route 9 across from the Marist College campus.

The project, known as Hudson Heritage, calls for a mixed-use community of 750 residential units, including multifamily apartments, townhomes and detached single-family homes. Approximately 350,000 square feet will be designated for retail and 80,000 square feet for a boutique hotel and spa.

Developers estimate the project could create more than 870 jobs in the community, plus about 300 during the construction phase.

Diversified Realty Advisors is based in Summit, N.J., and specializes in residential and commercial development and construction. EnviroFinance Group is an environmental investigation and remediation partner based in Manhattan. It focuses on land reuse and redevelopment.

Nicholas Minoia, managing partner of the Diversified Realty Advisors, said the proposed area for Hudson Heritage represents the “hole in the doughnut” for the region.

“It’s strategically located at the border of Hyde Park, it’s kind of the end of the line for retail development and very interesting given the confluence of location with Marist College across the street and Vassar (College) nearby, plus the Culinary Institute (of America),” he said. “And, generally speaking, a lack of this large scale development in the Hudson Valley.”

Hudson River State Hospital opened in 1871 as Hudson River State Hospital for the Insane. The former psychiatric center closed in 2001 and Diversified Realty Advisors bought the property 12 years later for $4 million.

The July 13 event featured the start of demolition for some of the former hospital buildings, but the project doesn’t actually have final approval from the town. The town is still reviewing its environmental impact.

But the abandoned structures have proved to be a health hazard, both from asbestos and cases of arson and vandalism. Minoia explained that certain circumstances in the town code allow for demolition of buildings declared structurally unsound.

Of the former hospital’s 56 buildings, five will be saved and renovated and the remainder will be demolished. The demolition will represent about 1.5 million square feet, according to Minoia.

Between asbestos abatement and demolition, Minoia estimates the development team will spend $18 million preparing the property for redevelopment.

The main building that will be saved for the project is the former administration building, which has been designated a National Historic Landmark. The 80,000-square-foot building is to be converted into a hotel with about 80 rooms.

A press release from the developers said that the location of the development, less than two miles from the Poughkeepsie Metro-North Railroad station, makes it ideal for commuters. The housing will feature a mix of rental units and town homes.

Minoia said the development, particularly the rental units, could appeal to the oft-targeted millennial and empty nester demographics.

“The market has changed dramatically over the last five to seven, eight years,” Minoia said. “Certainly during the Recession and post-Recession, it’s millennials, it’s moved-out empty nesters. It’s clearly a rental market based on difficulty to qualify for mortgage.”

But he also didn’t rule out students of the nearby colleges, who could be looking for market-rate residential units as an off-campus option.

As for the retail portion, Minoia said there is a large anchor tenant currently slated for some of the space. Beyond that, he expects “neighborhood retail,” meaning restaurants and smaller retail locations in a walkable environment.

Developers also plan to link the development with the Walkway Over the Hudson pedestrian bridge, a local park and the Marist campus through a 2.6-mile multiuse trail. About 40 percent – 60 acres – of the property would be left as open space. Whether or not that would include open public space has not been decided yet, Minoia said.

Construction is expected to take between eight and 10 years. Minoia anticipates the project will complete the environmental review process by year’s end. Following demolition, the retail construction would start first, followed by residential.