Seven years ago Alon Barzilay looked out of the window at Bourbon Blue onto the 1860′s building across the street and called his friend David Waxman. The 3 Rector Street building had everything to make an unbeatable residential project: a great location, perfect neighborhood, waterfront lot, cobblestone street and access to the Tow Path and two train stations. Three years later Waxman tried to make a five-story residential complex out of the historical former Labov Plumbing Supply structure but the year-long legal battle that ensued (coupled with the collapsed market) was enough to make Waxman and Barzilay pause and rethink things. By the time the legal commotion about Rector Street had died down, Waxman had a fresh perspective for the 11,000-square-feet of stone and new plans.

Their initial thought to tear down the structure was met with opposition from the…