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DT Raleigh - News & updates.

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I know it is very hard to "compete" with Charlotte when it comes to major announcements. I mean, who could compare tiny projects to 35-story residential towers and 700,000sf skyscrapers? DT Raleigh does lack the big news that keep the focus constantly on Charlotte's Uptown area, but on the other hand there are reasons to be excited about DT Raleigh. It is slowly getting out of the "dry" season following the 1991 completion of Raleigh's two tallest and largest towers, plus a new era of urban development and renewal has started with the continuous focus on Glenwood South district and its massive potential. The following articles paint a picture of today's DT Raleigh and give a little insight about what's coming ahead. Hope you guys find them as interesting as I did. I will comment on them later.

Downtown Raleigh gets boost

Progress Energy opens its new headquarters

By DUDLEY PRICE, Staff Writer

main-641660-378133.jpg

Gene Bradbury, right, an operations technician, gets out of the way while talking on the phone as Chris Wilson, left, and Juan Washington bring a table into a conference room at the new Progress Energy building. The room will temporarily house the staff setting up the building's phone system.

Staff Photo by Lisa Lauck

RALEIGH -- With speeches and snacks, Progress Energy executives and local officials Thursday morning cut the ribbon and formally opened Two Progress Plaza, the utility company's $100 million mixed-use project just off the Fayetteville Street Mall.

The hoopla was about far more than just Progress Energy's new building.

"Thank you so much for this great building," a beaming Mayor Charles Meeker told executives, "and we look forward to all the great things that will follow."

The largest downtown project in more than a decade has been a catalyst for the area's rebirth since it was announced two years ago.

Scarcely a new development was announced that didn't mention the vitality being brought to the long-moribund area by the 19-story project, which includes a parking deck, office space for 1,200 Progress Energy employees, condominiums and retail.

"What was significant to me is when Progress Energy announced their building, it meant it was safe for everyone to go ahead with their downtown projects," Meeker said.

He added that the utility's decision to invest in downtown enabled local officials to move forward with taxpayer-funded projects, including a new $192 million convention center, a $10 million removal of the Fayetteville Street Mall and support for a new $60 million Marriott hotel.

"It's easy to make public investment when private investment is leading the way," Meeker said. "It showed it was a good market."

The domino effect was visible from the entrance to Two Progress Plaza on Davie Street. Just a half-block away workers were riveting steel supports for the Hudson, a renovation transforming the former Hudson Belk department store into 66 condominiums and ground-floor retail space with a WTVD television studio. Three blocks away, The Dawson, a $20 million building with 58 condominiums, is going up at Dawson and Morgan streets.

There's more. The city recently bought a 10-story building in the 200 block of the mall formerly occupied by Raleigh Federal for office expansion and private retail. The city hopes to lure a restaurant to the ground floor. It is also marketing 10,000 square feet of retail space in two downtown parking decks. Developer Greg Hatem is renovating the former Heilig-Levine furniture store at Wilmington and Hargett streets and the old Raleigh Times building on Hargett Street.

But some hoped-for projects are still only a gleam in downtown boosters' eyes. Last year, many predicted announcements by three publicly traded companies that would bring hundreds more workers to the area. They were Electronic Data Systems, The News & Observer and RBC Centura Banks.

So far, no such announcements have been made. N&O publisher Orage Quarles III said in January that a new headquarters had been included in the five-year spending plan of The N&O's corporate parent, The McClatchy Co. of Sacramento, Calif. At the time Quarles said the newspaper had a list of downtown sites, but he declined to identify them or to comment on how soon a site would be selected. George McCanless, the N&O's senior vice president for finance, said nothing has changed since the January announcement. "We still have the same commitment to downtown," McCanless said.

EDS had considered bringing 500 workers downtown to the top floors of a 10-story building being developed by Progress Energy and developer Harold Lichtin. Bottom floors would contain a county library, and the building would be next to Progress Energy's headquarters on Fayetteville Street Mall. Those plans for the building dissolved after EDS lost a lucrative contract to manage the state's Medicaid claims program.

RBC Centura is still the biggest question mark lingering over downtown. City boosters have tried for two years to persuade bank officials to relocate the company's headquarters from Rocky Mount to a downtown site.

Kel Landis, RBC's chief executive, has said repeatedly that the bank would not move its headquarters. In a recent interview, bank president Scott Custer, whose office is in Raleigh, said the company wants to consolidate its Triangle region operations into a single grand facility.

"Our current building situation is not ideal, and we would be interested in options as they develop. That said, we haven't seen an opportunity yet that has caused us to sit down and make a serious decision," Custer said.

Still, many involved in downtown recruitment efforts are hopeful that RBC will build a 12- to 15-story building on a Martin Street site owned by Progress Energy opposite the Mecca Restaurant. The city has offered parking for as many as 500 people in existing parking decks, among other incentives. RBC executives deny they are close to making a decision.

Margaret Mullen, president of the Downtown Raleigh Alliance, said two other businesses considering moving downtown backed out because of uncertainty over when the mall removal will begin, and that a half-dozen others have put their plans on hold. She declined to identify the businesses but said they wanted space ranging from 5,000 to 75,000 square feet.

"Progress Energy is a huge first step, but we need construction of the convention center under way and Fayetteville Street actually to start," Mullen said. "To many, investing in downtown is a risk ... in many ways a pioneering effort.

"Investors need to see consistent commitments ... so they'll know the community is committed."

Staff writer Dudley Price can be reached at 829-4525 or [email protected]

======================================================

Downtown building gets new owner

More office vacancy leads to lower price for 15 stories[

By JACK HAGEL, Staff Writer

RALEIGH -- 333 Corporate Plaza, a 15-story office tower on the Fayetteville Street Mall, catty-corner to Progress Energy's new building, has changed hands.

Raleigh Development Co. paid $7 million to Modern Continental, based in Cambridge, Mass., for the 170,000-square-foot office building, said Don Kovits, vice president of Modern Continental. The deal closed Wednesday.

The sale price was lower than the building's assessed value of $8.5 million in 2002 and the $8.15 million Modern Continental paid for it in late 2000 -- when vacancy rates in downtown Raleigh were at 5.4 percent and headed downward, according to Karnes Research, a real estate research firm in Raleigh.

The slow economy forced companies to trim down or bail out, causing downtown vacancy rates to climb to the current 8.9 percent. That meant lower rents and more competition for landlords.

And 333 Corporate Plaza wasn't spared. In 2002, the building was almost full. Now, it is only two-thirds occupied, mostly because advertising agency McKinney & Silver vacated about 40,000 square feet when it moved to the American Tobacco Campus in Durham.

But Bobby Lewis of Raleigh Development said the time was right to invest. "As downtown continues to develop, opportunities like this will not be available in the future," he said.

Lewis hopes to improve the building's occupancy to 80 percent with expansions of existing tenants and new leases. His firm will move to the building within 60 days.

Meanwhile, Lewis has been trying to lure WindChannel Communications to the building. The wireless broadband service provider has plans to double its staff of about 30 within the next six months, said Randy Choplin, WindChannel's chief executive.

The company now occupies 4,500 square feet at 414 Fayetteville Street Mall, which is also owned by Lewis. But WindChannel is expected to need 10,000 square feet as the expansion nears. No lease has been signed at 333 Corporate Plaza, Choplin said, but "it's going to happen, it looks like."

Staff writer Jack Hagel can be reached at 829-8917 or [email protected]

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Developer mulls hotel on West Street

By JACK HAGEL, Staff Writer

RALEIGH -- Developers are considering a hotel for a site near the bustling Glenwood South strip.

Marlowe & Moye, a local development company, has a contract to buy the former Pine State Creamery vehicle maintenance facility at 401 West St. The company has spent the summer mulling options for the 0.8-acre site, Howard Moye said.

"We're just trying to assess the site and determine what would be the best mix for it," Moye said.

The group is in discussions with hotel companies, but also has discussed the possibility of a five- to six-story, 60,000-square-foot office building and a mix of retail or residential.

If the Marlowe & Moye project happens, it would be part of almost four acres of restaurants, shops, offices and condominiums planned for the old industrial area.

Developer Gregg Sandreuter plans to buy property owned by the State Employees Association of North Carolina between West and Harrington streets. He is considering a mix of condominiums, shops, restaurants and offices on the two-acre tract.

And Greg Hatem, whose Empire Properties owns numerous buildings downtown and in the warehouse district, is buying property across North Street from the Employee Association's land. His plans include a $4 million mix of restaurants, offices, shops and condominiums on the one-acre site.

Marlowe & Moye has spoken with four hoteliers this summer about a 125- to 150-room boutique hotel, said Reid Jones, a partner with Mikels & Jones Properties of Raleigh, which represented Marlowe & Moye.

"The area is screaming for a hotel down there," Jones said. "People come in and they stay at Crabtree Valley and what do they do? They get in a taxi and say: 'Take me to Glenwood South' to go eat. And then they've got to go back. ... I don't want to slam downtown, but if you go and stay at the new convention center hotel, where are you going to eat?"

That hotel, about a mile from the Marlowe & Moye site, is expected to be completed by late 2007.

The Marlowe site's difficulties -- narrow dimensions which could prove hard to build upon, land cost and the amount of parking that would satisfy the area's growth -- could be off-putting to hotels, Moye said. "Trying to find a way to try to accommodate parking is problematic," he said.

Raleigh developer Neal Coker, who owns a 450-space parking garage at the nearby corner of Tucker Street and Glenwood Avenue, said he has "a potential involvement" in the project, but declined to comment further.

The project could also run into some competition.

Another Raleigh developer, Reynolds Company, has been in negotiations to put a boutique hotel at 309 Hillsborough St. That project, on land bought from the city of Raleigh, would include apartments and offices.

This summer, Quaintance-Weaver Restaurants and Hotels of Greensboro dropped plans for a $30 million luxury hotel on Glenwood Avenue just inside the Beltline. But the company was unable to find a suitable design for a two- or three-story parking deck.

Meanwhile, Raleigh developer Michael Sandman dropped plans to buy the Velvet Cloak Inn earlier this year, and its owners put the 40-year-old Hillsborough Street landmark back on the market.

Moye would not give a schedule for his project, adding: "It's not just going to be something that's accomplished overnight."

Staff writer Jack Hagel can be reached at 829-8917 or [email protected]

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The completion of Two Progress Plaza's commercial component (the 19-story tower) has been a blessing. The project was done fast and it looks as good as we expected it. OK, we all wish it was taller and "thinner", but we should be happy to have it, anyway. After a personal discussion with a city official, it was confirmed to me that the residential part is going to break ground this month. Two Progress Plaza has great significance and it may inspire confidence to other developers.

The changing of the guard for 333 Corporate Plaza is a great thing. As is, this tower is underutilized. The previous owner had nice plans, but he obviously couldn't deliver them :(

Marlowe & Moye's proposition is good, but the location isn't ideal. The elevated railroad tracks, directly to the West, will definitely be a minus for building a hotel over there. Sandreuter's plans, however, will help the image of that neighborhood, assuming he builds something of equal size with (or greater than) The Dawson. Hatem's small-town vision is too little to make a difference, but he deserves an honorary mention. Maybe someone will be interested in getting that warehouse (or whatever that building is), directly to the North of 518 West restaurant and do something with it. A 6-8 stories building makes sense there. Parking is always an issue, but there is plenty of room for an underground deck... easily.

The reopening of Fayetteville Street is, without a doubt, a major card and the city is willing to play it. Delays have caused more damage that good. At this point in time, we should all work together and prevent further delays from obscuring the significance of this project. Obviously, some businesses bet a lot on the reopening.

I left one thing for the end: RBC/Centura. Their indecision bothers me a bit. Sure, for as long as they do not say "No" to relocating here, we maintain some hopes. However, we should not be wasting our energy for nothing. I prefer to get a negative answer now than waiting another 6-12 months for it. If RBC/Centura does in fact decide to move its headquarters to DT Raleigh, then the envisioned 12-15 story tower leaves much to be desired. The proposed location is prime for something taller than 20 stories. What the heck... a 30+ story skyscraper would have made more sense there. If RBC/Centura is to be given some land for something like 15 stories, or smaller, then they might as well get the site where Lichtin Building was going to be built. It will be much closer to the parking decks and will offer more incentives for retail businesses to open at the nearby Two Progress Plaza. The proposed location deserves more and better than a 15-story tower.

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