Chamber of Commerce Incubator Dropped as Lee Lofts III Adds 37 Apartments

Utility construction begins Monday as the final phase of the Lee Lofts redevelopment advances toward a planned 2027 opening

A new round of utility construction will begin Monday, Aug. 3, along North Santa Fe Avenue as work continues to transform the final building in the historic H.D. Lee complex into downtown housing.

Smoky Hill Construction will install new fire-suppression and domestic water service for Historic Lee Lofts Building III in the 200 block of North Santa Fe. The work is expected to take approximately three to four weeks, weather permitting. Northbound traffic will be shifted around the construction area, and motorists could experience minor delays.

The utility work is a relatively small piece of a much larger project: the rehabilitation of the southernmost and last remaining vacant warehouse in the Lee complex.

37 New Downtown Apartments

Building III, also referred to as Lee Warehouse Lofts Phase III, is located at 248 N. Santa Fe Ave. Plans call for the five-story building to be converted into 37 apartments.

A Salina311 review of the approved architectural plans found a mix of approximately 22 studio apartments, 13 one-bedroom apartments and two two-bedroom apartments. Units shown in the plans range from approximately 486 to 1,016 square feet. The first floor also includes a resident community room.

The third phase was originally designed with 32 apartments. Overland Property Group later increased the number to 37 by adding studios and revising the unit mix. When all three phases are complete, the Lee Lofts complex will contain 140 apartments: 53 in Phase I, 50 in Phase II and 37 in Phase III.

That is a considerable amount of housing concentrated on approximately 1.47 acres in downtown Salina, where the practical goal is density rather than the familiar suburban formula of spreading buildings and parking across half the county.

Commercial Space Was Removed From the Plan

Earlier plans reserved part of Building III for a potential Salina Area Chamber of Commerce business-incubator project. Austin Kack of Overland Property Group told the Salina Board of Zoning Appeals in November 2025 that the proposed incubator did not move forward.

The space was instead incorporated into the residential portion of the building, allowing the project to increase from 32 to 37 apartments. The current plans do not show dedicated public commercial space in Building III.

Commercial and office space remains part of the broader Lee Lofts campus, particularly in the previously completed buildings.

Opening Targeted for Spring 2027

Overland Property Group’s current development schedule identifies spring 2027 as the target for welcoming residents into Phase III. Construction was initially scheduled to begin near the end of 2025, although the developer acknowledged during public meetings that the closing and construction schedule could move into early 2026.

The August water-service work demonstrates that the project has moved beyond preliminary approvals and into major building-system installation. The new lines will support domestic water use and the fire-suppression system required for residential occupancy.

Financing Includes Housing Bonds and Tax-Credit Programs

A final, all-in development cost for Phase III is not stated in the public records reviewed by Salina311.

The most recent public financing notice authorized consideration of up to $10 million in Kansas Development Finance Authority housing revenue bonds to finance a portion of the acquisition and rehabilitation costs. Those bonds are limited obligations repaid from revenue pledged by the developer. They are not general obligations of the State of Kansas or the City of Salina and are not backed by local taxing authority.

Earlier Kansas Housing Resources Corporation records showed the project seeking a $7.7 million private-activity bond allocation through the state’s 2024 4% Low-Income Housing Tax Credit application process. The increase between the earlier application and the later $10 million bond ceiling does not necessarily represent an increase in public spending; the figures describe financing capacity, not a direct taxpayer grant.

Kack also told the Board of Zoning Appeals that Phase III participates in a KHRC housing program and a separate historic rehabilitation program. Public records reviewed for this story did not identify a new direct City of Salina cash contribution specifically for Phase III.

Rents Have Not Been Announced

A rent schedule for Building III has not yet been publicly posted.

For comparison only, the existing Lee Hardware Lofts website currently lists income-restricted units in the completed buildings at $918 per month for a one-bedroom apartment, $1,090 for certain one- and two-bedroom units and $1,503 for a two-bedroom unit serving a higher income category. Those prices are for existing Lee Lofts apartments and should not be treated as confirmed Phase III pricing.

The final rents will likely depend on apartment size and the income level assigned to each unit under the project’s housing-finance requirements.

Demand Appears Strong, but Reservations Are Not Confirmed

During the November 2025 zoning hearing, Kack said the housing program required the developer to demonstrate a waiting list at least as large as the number of apartments proposed for Phase III. He said the Lee Lofts development had returned to a full waiting list after Phase II opened and reported no significant occupancy problems.

That indicates demand for downtown apartments, but it does not establish that all 37 Phase III units have been formally reserved or leased. A Phase III application date, leasing schedule and current reservation count have not been publicly announced.

From Lee Hardware Warehouse to Downtown Housing

The property’s history stretches back considerably further than the latest redevelopment plan.

Henry David Lee founded the Lee Company in Salina in 1889. After a 1903 fire destroyed the original mercantile and hardware buildings, two five-story masonry structures were constructed in 1905.

The building now becoming Phase III was added to the south side of the complex in 1928 as the Lee Hardware Company expanded. The reinforced-concrete and brick warehouse was designed by Salina architect Charles Shaver.

The complex later served as warehouse space and was last occupied by McCune Paper Company, which discontinued operations in 2005. The H.D. Lee complex was added to the National Register of Historic Places and the Register of Historic Kansas Places in 2008.

Approved exterior work for Building III includes brick and mortar restoration, removal of old metal fire escapes, repair of existing entrance stairs and restoration of the building’s steel window frames with new insulated glass.

More Than an Apartment Project

The significance of Building III extends beyond the addition of 37 rental units.

Completing the final Lee warehouse will remove one of the most prominent remaining vacant structures from the downtown corridor while bringing the full Lee Lofts complex to 140 residences. More people living downtown can provide a steadier customer base for restaurants, entertainment venues and service businesses, especially during evenings and weekends when office traffic declines.

The project also demonstrates the tradeoffs involved in historic redevelopment. Tax credits and specialized financing make rehabilitation possible, while income restrictions, preservation rules and construction inside a nearly century-old warehouse make the project more complicated than building apartments on an empty tract.

Final project cost, Phase III rents, the formal leasing date and the number of units already spoken for remain unanswered. The utility work beginning Monday, however, is a visible indication that another long-vacant piece of Salina’s industrial history is moving closer to reuse rather than demolition.