Charleston, S.C., has been on The Simpson Organization's to-do list for about five years. The Atlanta-based real estate investment firm is finally getting its chance with the Cigar Factory, a 232,000 sq. ft. historic property it acquired in June. Simpson plans to redevelop the landmark into a mix of upscale condominiums, retail and office space.

The Cigar Factory is one of Charleston's largest buildings, occupying an entire city block in the city's Upper East Side. It was built in 1881 as a cotton mill, but sold in the early 1900s to American Tobacco Co., which manufactured cigars there until the 1970s. The property was then redeveloped into office space and found relative success under various owners. But in 2006 the factory lost its largest tenant, Johnson & Wales University, leaving the building with a vacancy of roughly 70%.

The building was sold by a private group led by former Jupiter Realty Corp. executive J. Luzuriaga, one of the most active real estate investors in Charleston. Robert Rizzi, executive vice president and partner of New York-based Broad Street Advisors LLC, put the transaction together. “Charleston is one of the stronger secondary markets on the East Coast, but there aren't a lot of deals large enough to draw regional or national investors there,” says Rizzi. “The Cigar Factory is one of the larger properties on the Charleston peninsula. That, along with its historical nature, combined to attract quite a bit of interest.”

Boyd Simpson, president of The Simpson Organization, says the firm beat out other contenders by paying just under $20 million. It plans to pump at least that much — likely more — into the building's redevelopment. Simpson says it took “about five seconds” to decide on a mixed-use approach. Plans call for 77 residential condominiums, roughly 35,000 sq. ft. of retail space and 30,000 sq. ft. of office space. The condos will range in price from $400,000 to $1.4 million.

Simpson's portfolio of approximately 35 properties in the Southeast is valued at about $600 million. Other historic properties the firm has redevelopment include The Georgian in Athens, Ga. and Tryon Plaza in Charlotte, N.C.

“There is terrific underlying value in buildings that were trophy properties when built, in good locations, but perhaps have become neglected over time,” Simpson says. “We bought the Cigar Factory for about $80 per sq. ft.; it would cost $300 per sq. ft. to reproduce it today.”

The real estate investor says Charleston meets his company's core requirement: a supply-constrained market that's showing demonstrable growth. He aims to start redevelopment of the Cigar Factory in the first quarter of 2008 and reopen the building in mid-2009.

The historic preservation involves replacing about 400 windows that measure 5-by-12 feet each, some of which had been covered up over time. Besides views of the city's downtown, Charleston Harbor and the Ravenel Bridge, other amenities will include a pool, health club, a private bar for residents and plenty of parking — a rare commodity in Charleston.

One component of the project that isn't changing is the name. “Everyone in Charleston has called it the Cigar Factory for more than 100 years,” says Simpson.“It's a grand, historic building in a city that loves its history.”