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In real estate, not even spooky trumps location
Developers converting old asylums into condos; homebuyers show interest

Construction work is ongoing at the former Danvers State Hospital in Danvers, Mass. Though once described as "the scariest building in the world," AvalonBay Communities is constructing 497 luxury apartments and condominiums on the site.

"There's obviously a lot of notoriety associated with the site," said Scott Dale, a vice president at AvalonBay Communities Inc., which is constructing 497 luxury apartments and condominiums. "We think at the end of the day, that will be helpful."

No units are on the market yet, but Dale expressed confidence that occupancy won't be hurt by the property's jaded past, including a cemetery with some unmarked graves — one reminder of the sad history of treatment of the mentally ill.

The formula has been successful elsewhere.

Six hundred would-be buyers signed up for the first 60 homes built at the site of the former Dammasch State Hospital, a $500 million project in Wilsonville, Ore., 20 miles south of Portland, city officials said.

In Traverse City, Mich., developers of a former asylum overlooking Lake Michigan have down payments in hand from buyers looking for condos, and a waiting list should those buyers bow out.

Rents at the 500-unit Octagon, the former New York City Lunatic Asylum on Manhattan's Roosevelt Island, are 10 percent higher than expected, developer Bruce Becker said. Studio apartments in the $170 million development start at $1,700.

"It certainly still has a slight mystery to it, but I wouldn't say scary or haunted," said Rebecca Shaw, who is moving with her boyfriend into a one-bedroom unit at the Octagon next month.

'Human rat trap'
Built in 1841, the asylum later became a hospital, which closed in 1955. Trailblazing journalist Nellie Bly spent time undercover at the asylum and wrote in 1887 that it was a "human rat trap."

Shaw, who grew up on Roosevelt Island, recalled bicycling and roller-skating on the grounds.

"At that time it was weeds and bushes, overgrown plant life, which made it really cool," the 30-year-old social worker said. "For kids, that was part of the appeal, it was scary and spooky. When you get older you decipher what's real and what isn't."

What's real: parking space, short commute.

"For my work, I need to be close to the city. And the price is right for this point in my life," Shaw said.

The housing boom led developers to former mills, old schoolhouses, and now state hospitals. The mentally ill in the past were thought to benefit from bucolic settings. The Danvers facility, opened in 1878 as the State Lunatic Hospital, is atop a large hill overlooking the North Shore, and its 75 acres featured paths and working farms.

Eventually, many facilities closed and were left vacant as treatment moved away from overcrowded institutions in favor of smaller group homes.

Dale, the developer at Danvers, said AvalonBay is creating a "campus-like environment" with a swimming pool, WiFi cafe and fitness center. Rents will start around $1,400 for a one-bedroom, and about half-a-million dollars for a condo.

AvalonBay, since buying the property for $18 million late last year, has taken over security. In the past five years, Massachusetts State Police charged 150 people and issued warnings to an additional 450 people for trespassing, said spokesman Trooper Thomas R. Ryan.