Dave McCormack never thought much about Petersburg until his brother came back from shooting video around Old Towne for a local television station.

Intrigued, he started exploring. He was attracted by the aging brick houses and crumbling old warehouses he found around downtown.

"It was extremely undervalued," McCormack remembers.

His fascination with Petersburg's buildings has led to a $12 million project to renovate a large warehouse in a forgotten fringe of the city's downtown area into 111 apartments and five condominiums -- and the goal of someday creating an entirely new neighborhood.

After about four years of success renovating and selling houses in the Fan District and Battery Park areas of Richmond, McCormack thought he could spot a market opportunity. He also wanted the kind of open living space he and his brother, Tom, could use to play their music and a place for his brother to do his sculpture.

So he bought one of the eight sections of the old Mayton Transfer Co. at Fourth and Bank streets in 2000.

For a few years, the brothers enjoyed the space and feeling of living in a loft-like space. But when his brother married, the place started feeling empty.

McCormack's ventures buying and renting out other Old Towne Petersburg properties were going well.

In 2005, he joined with Tony Collins, a Norfolk developer who had his own big plans in Petersburg. Collins' Axis Development has plans to build a $150 million mixed-use development straddling the Petersburg-Prince George County line.

McCormack and Collins bought the other seven sections of the Mayton Transfer warehouse.

Their purchase came just a few months before the Base Realignment and Closure Commission announced Fort Lee would expand. Fort Lee should see a 40 percent increase in the soldiers and civilians employed on the base as well as thousands more soldiers coming to the post to train.

Roughly two-thirds of the post's employees will live outside the fort -- a prime opportunity for his project, McCormack said.

But they aren't the only ones coming.

A new study by the Virginia Employment Commission said that the base expansion will generate thousands of off-post jobs as well.

"The more news we hear, the more positive it gets," said Ron Reekes, Petersburg's assistant director for public works, one of several city officials pushing to revitalize downtown.

The Mayton Transfer project is one of four major conversions of commercial buildings now under way in Old Towne, he said.

McCormack said he expects the first phase of the $12 million, 100,000-square-foot project -- five condominium units and 47 apartments -- should be ready for new occupants by February.

Construction of the second phase, another 64 apartments, will start that month.

The condominiums will be two-story, 1,300 to 1,500 square-foot units with a contemporary design, located in the newest bay of the warehouse, a part of the structure built in 1978.

The rest of the warehouse was constructed between 1911 and 1915.

The apartments in the older sections will be oneor two-bedroom units, ranging in size from 650 to 1,050 square feet.

McCormack expects them to rent for between $750 and $1,000 a month. His market, he said, is the entire metro area -- the project is just a couple of blocks from Interstate 95.

"People who work in Chester and commute from the north will find it makes sense to commute from the south," he said.

With three other old commercial buildings and four lots nearby the Mayton Transfer building in his portfolio, McCormack thinks the eastern edge of downtown has big potential.

"We're two blocks from the river," where there has been talk of putting in a new marina, he said. "I'm sort of acting as master planner for the area and I think this could be Petersburg's hip, happening area."