Abandoned mental institutions may be most famous for the ghost hunting they inspire, but one formerly deserted hospital has found another fate. At the redeveloped Traverse City State Hospital in Michigan, you will more likely find wine-makers, coffee roasters and condo dwellers than paranormal specialists and thrill-seeking teenagers.

Built in 1885 as the Northern Michigan Asylum, the hospital treated the mentally ill, drug addicts and the elderly before finally ceasing operations in 1989. Left abandoned for years, a Traverse City redevelopment committee recommended its destruction in 1998, until a group of local citizens and a development group stepped in with renovation plans.

Now called the Village at Grand Traverse Commons, the urban transformation has slowly attracted a new set of residents and business owners. To encourage development (and perhaps remedy the aversion to settle in old asylums), the state of Michigan allows the business owners and residents to operate and live nearly tax-free until 2017.

The tall and wide buildings still look distinctly Victorian from the exterior, with light-coloured brick and red-roofed spires. Step inside the renovated sections, however, and the spaces feel modern and hip. When you visit, check out these favorites:

Higher Grounds Trading Company
Housed in the former asylum's laundry room, this cosy coffee shop offers only 100% fair trade coffee, sourced across the world from Uganda to Peru. The made-to-order coffee can be prepared in five ways, but bring your own mug or be prepared to borrow one from the wall: the coffee bar is paper cup-free.

Gallery 50
In the spirit of the location, the gallery gives special attention to art created from found, reused or recycled materials. More than 150 artists in mixed media are showcased across1,850 square feet of studio space.

Left Foot Charley
This winery looks nothing like the typical chateaux, but the loft-like space serves up northern Michigan wines just as good as any estate setting could produce. Try some wine "on tap" or swig some hard cider, made from Michigan apples and flavoured with cinnamon or ginger.