RALEIGH — The Florida developer behind an ambitious plan to revitalize the blocks just north of downtown Raleigh is scaling back the project.
LNR Property, which has already bought 12 acres from the state for its Blount Street Commons development, will not purchase the remaining nine acres where the final two phases were to be built.
The state Department of Administration, in consultation with the Attorney Generals office, agreed to let LNR out of its contract. LNR paid a $1 million fee to get out of that contract, and the state will keep the $200,000 deposit LNR put down on the remaining land.
LNR officials didnt return a call seeking comment on Monday. The companys decision to not purchase the final two phases was attributed to the real estate markets slow recovery, according to the state.
Blount Street Commons has been in the works since 2005, when LNR was picked by the state to redevelop parking lots and offices covering blocks bounded by Peace Street to the north, Lane Street to the south, Person Street to the east and Wilmington Street to the west.
Plans called for the project one of the largest redevelopment efforts in downtowns history to include up to 495 condominiums, townhouses and single-family homes, up to 110,000 square feet of shops and 25 renovated homes, some of them historic.
But the project began ramping up just as the real estate market was entering a prolonged slump. In late 2008, LNR got an extension from the state allowing it to delay purchase of the final two phases until January 2014.
LNR acquired the first two phases for $10 million in 2007 and 2008. The first phase is to include 75 homes mostly townhouses and row houses and the renovation of several historic homes. LNR has found buyers for several of the historic homes, but construction of the townhouses and row houses has stalled.
The final two phases of the project were to cover two and a half blocks at the south end of the development.
Speros Fleggas, deputy secretary of the Department of Administration, said the state plans to assemble the Blount Street Historic District Oversight Committee early next year to reassess everything and possibly come up with a new course of action as to what to do with the property.
The land could be once again marketed to developers, either as a single chunk or by breaking it up into multiple parcels. The city of Raleigh is only now collecting public input for its own study of how best to update the Person and Blount streets corridor.
LNRs decision to scale back Blount Street Commons is a reminder that while the Triangles housing market is improving, it remains a challenging environment for developers. Much of the new residential construction occurring near downtown in recent years has been apartments a sector of commercial real estate that has thrived as the market for single-family homes and townhouses has been slow to recover.