Sandwiched between the steel and concrete walls of MIT’s expanding campus and the late-Victorian homes and Haitian barbershops of working-class east Cambridge, the Garment District caters both to college and blue-collar shoppers—or anyone searching for clothes at rock-bottom prices.

But the demands of the city’s climbing real estate market are pressuring the “alternative department store” to change the way it does business and could lead to its historic building’s renovation or razing and replacement with condominiums, pending an agreement with building co-owner and real estate developer Tani Halperin.

As manager, co-owner, and president of The Garment District, Inc., Christopher Cassell admits that the building, parts of which date back to 1891, is in dire need of rehabilitation.

Tiles, some painted a garish pink, loosely hang on the outside of the building. The floors are worn, the building’s structural integrity generally sound but not perfect.

Renovations will cost money—potentially a lot of it—leaving owners with a predicament: what should one do with a historic but increasingly ramshackle building situated on real estate that is in high demand?

“Condos drive the real estate market,” Cassell says. “The building does need work. How do you get that work? Condo-ization would help pay for rehab.”

Downstairs, a handful of shoppers rummage through clothes piled a foot deep across a wide expanse of floor space at Dollar a Pound+. (In fact, merchandise is currently priced at $1.50 per pound.) A shoe section offers used wingtips and new knee-high boots and stack-heeled monstrosities. Upstairs, clothing is more or less organized into racks of new, used, and vintage ’60s and ’70s duds.

The Garment District is 14 years old, the complement to the Dollar A Pound business that began when the building still housed an industrial rag manufacturer.

The 200 Broadway St. property was assessed in 2005 at a total value of $1,901,500—of which the 14,896-square-foot lot accounted for nearly all, at $1,836,200. The City of Cambridge lists the property as having a living space of 35,502 square feet, of which Cassell says about 5,000 is unusable.

Cassell and Halperin are developing plans to renovate or replace the building, and Cassell said the tentative plan is for condos upstairs with retail space on the first floor.

Cassell and Halperin bought the property for $3.4 million on May 5. The business is co-owned by Cassell and partner Brooke Fletcher.

The Garment District occupies a little cyberspace as well, peddling its wares online at www.garmentdistrict.com. The site consolidates the store’s status as a destination for vintage shopping—when asked what brought her to the garment district, shopper Sam L. Steves, 16, of Byfield, Mass. responded, “the internet,” pausing before adding “and cheap clothes.”

The Garment District’s extensive clothing-sorting and processing operations, which occupy nearly half of the building’s floor space, could be relocated off-site. Unusuable items are recycled, while unwanted but functional clothing is bundled and sent to the Third World.

But fiddling with processing operations won’t solve the Garment District’s dilemma, because space is not the greatest obstacle to conversion to condos.

The existing structure is not sufficiently set back from the road and, importantly, it can offer no parking. Halperin told The Boston Globe that the current building could not be converted into housing. Building subterranean parking, Cassell says, would complicate aspirations to renovate but preserve the historic building.