A Washington County developer has scrapped plans for two-story townhouses atop the old Lazarus-Macy's department store Downtown and will instead build up to 65 condominiums.

The change has helped to push the cost of the Lazarus-Macy's conversion into condos, offices, and shops to $65 million, up sharply from the $49 million estimated when Millcraft Industries Inc. unveiled the project in December.

At one time, Millcraft had planned as many as 22 rooftop townhouses ranging in price from $700,000 to $1.1 million. Another 25 condominiums were part of that plan, priced from $275,000 to $650,000.

However, Millcraft decided during the summer that the two-story townhouses "were a little too big, and we're listening to what the market is asking for," Chief Financial Officer Brian Walker said yesterday.

"They were the biggest units and we felt the market was crying for smaller units. At least our research is telling us that," he said.

Millcraft now hopes to build three stories of condos, up to 65 units in all, on the Lazarus-Macy's roof. Mr. Walker said the condos will be grouped around a central courtyard, the same plan envisioned under the original design.

The condos will be priced from $335,400 to $634,500. Buyers will have the option of purchasing a second unit to make a two-story condo or two side-by-side units for a larger single-floor condo, Mr. Walker said.

So far, Millcraft has received commitments on 10 of the condominiums. Both Mr. Walker and Millcraft Chairman Jack Piatt said they are happy with the early response. The condo model in Piatt Place, as the Lazarus-Macy's building is now called, has been open since late May.

"We're really excited about it. It's great. It's a little bit better than we expected," Mr. Piatt said last week of the commitments.

Mr. Walker said he expects to have all 50,000 square feet of ground-level retail space in the building leased at some point in 2007. The Capital Grille restaurant will serve as a retail anchor and is expected to open next summer. A European-style market serving prepared foods and catering to the needs of Downtown residents is set to open at the same time.

Millcraft also is close to finalizing a deal with a "sandwich-type shop" to lease some additional retail space, Mr. Walker said. It also is involved in negotiations with eight to 12 companies about leasing the 180,000 square feet of office space available on the second, third and fourth floors.

The developer is finalizing plans for a $21 million reuse of the old G.C. Murphy store on Fifth Avenue for condos, apartments and shops, and a $50 million development on Forbes Avenue involving similar uses.