City's ugliest lots? These pioneers will take them.

With high land costs and rising housing demand, industrial areas are becoming new outposts for affluent urban dwellers.

When developer Bob Silverman wanted to turn an abandoned lumberyard near a noisy Atlanta rail switchyard into a Provence-style neighborhood four years ago, it wasn't just bankers who snickered.

Nearly everyone had the same thought at first: "People thought I was crazy," he says.

The final product – dubbed M West – turned out to be more German Bauhaus than rustic France. But the 183 homes on 12 acres sold out in nine months when it opened last year with units starting at $200,000. The buyers were seemingly oblivious to the concrete plant across the street and the exotic dance club advertising "Blue Collar Lunch" next door.

It's all part of the changing landscape of urban centers. With high land costs and rising housing demand in US cities, it's old concrete plants, back lots of steel mills, and other ugly lots that are becoming the new outposts for affluent urban dwellers.

"Reuse [of industrial properties] is definitely a big trend in cities that may no longer be industrial hubs, but are becoming social centers that require housing," says Trish Riggs, of the Urban Land Institute, a think tank in New York.

The Euro-fication of housing has been driven by high fuel costs and denser development since about 2001. Now, ugly lot development is taking place from Salt Lake City to Baltimore, Md., often along withering industrial corridors, experts say.

•In Pittsburgh, SouthSide Works is a former steel mill site recently reimagined as a "mixed-use" development with homes, shops, and offices along the riverfront, anchored by the turrets-and-minarets profile of The Cheesecake Factory restaurant.

•In Philadelphia, the University of Pennsylvania is redeveloping 40 acres of industrial riverfront on the Schuylkill River into a sprawling neighborhood that would meld together Center City and West Philadelphia.

•Here in Atlanta, developer Jim Jacoby is finishing Atlantic Station, a megasize residential and shopping center built on top of the old Atlantic Steel grounds. IKEA, the Swedish furniture store, is the cornerstone tenant.

Wayne Mason, an Atlanta land prospector, calls it "the train-track strategy." A few years ago, he spotted an abandoned concrete plant next to a gas station that doubled as a drug den: They sold no gas and the milk at the minimart had expired months ago.

"It was the sorriest piece of property I ever saw," Mr. Mason says. He toppled the plant and crushed tons of spilt concrete into fill. After he sold the land to a developer, densely built townhouses spread across the lot during the past three years. And the gas station is gone now.

Greasing the gears for industrial redevelopment are "brownfield" laws that allow the reuse of industrial property. They started to proliferate in the mid-1990s, and four years ago the financial calculus made reusing these lots cheaper than buying so-called "green," untouched or nonindustrial, land.

The trend also reflects the appeal of living downtown, where people choose to be surrounded by a diverse population and close to mass transit. Neighborhoods' close quarters help incoming residents to feel safe and comfortable, proponents say. "Nobody wants to be a pioneer in an industrial neighborhood if you're all alone," says Delores Conway, director of the Casden Real Estate Economic Forecast in Los Angeles.

But the biggest reasons for converting the ugliest lots into thriving neighborhoods are that new residents can avoid traffic hassles and cut gasoline costs.

American households spend 20 percent of their household budget on transportation, according to the Urban Land Institute. People can afford to live in more expensive urban enclaves if they live closer to work or trains. That is essentially the European model, where households spend only about 7 percent of their budget on transportation, according to the Institute.

In cities, "crime is down, schools don't matter to the 75 percent of households that don't have school-age children, and given what it's costing to drive, there's been an explosion of interest in these sites that were previously ignored," says Ed McMahon, an urban redevelopment expert in New York.

"At first it was mostly gays, but now it's the echo generation that's willing to be pioneers," says Mr. Silverman. "If we could bring in the young marrieds by improving [urban] schools, there'd be no stopping this movement. But that's a big challenge."

Others worry that poorer residents could be priced out of the market.

"We see a lot of shifting values in this process of people returning to the city, and a lot of it will come back to issues of equity and that we don't tip it too much [toward the rich] and provide good balance and mixed-income opportunities," says Rebecca Flora, executive director of the Green Building Alliance, a nonprofit in Pittsburgh.

But for some, diesel locomotives and cement trucks are no longer deal- breakers, but part of living outside the cookie-cutter mold. "It's great, everybody hangs by the pool, and it's social hour at the dog park every morning," says M West resident Ted Fitzgerald. "I wondered a little at first about the location, but after a while you don't really hear the trucks."

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