With the demolition completed on the vacant one-story cinder block buildings on Marsh and Nipomo streets, construction is officially under way on the $8.5 million Marsh Street Commons, a mixed-use project that will include 12 residential units and 8,591 square feet of commercial space in downtown San Luis Obispo.

The concrete rubble left from the demolition will be crushed on site and reused as part of the new structure. It is part of developer Andy Mangano’s plan to recycle as much of the building’s materials as possible. Now that the site has been cleared, grading will begin, and all of the underground utilities, sewer, electrical and storm drains will be placed.

Mangano Homes plans to build commercial space on the ground floor, topped with four two-bedroom residential lofts facing Marsh Street and eight small single-family homes that would be accessed on Nipomo Street. The project is described as contemporary Craftsman.

The development’s four lofts will range from 1,435 to 1,630 square feet. The eight three-bedroom homes will range from 1,623 to 1,869 square feet.

The homes will be built behind the commercial and loft building.

The project is expected to be completed in mid-2013.