Real Deals

Long-stalled Centennial Campus residential project to get restart

dbracken@newsobserver.comMarch 23, 2013 

 

RALEIGH

A key residential project on N.C. State University’s Centennial Campus is poised to restart more than seven years after a debt dispute caused it to ground to a halt.

Raleigh-based White Oak Properties, which was chosen by university officials to take over the project about a year ago, has filed plans with the city of Raleigh to build up to 111 townhouses and condominiums as part of a first phase of development.

“The other efforts might have been a little early but I think the timing is right now,” said Roland Gammon, White Oak’s owner.

The company hopes to begin construction in the third quarter. Gammon said the first act will be to install the pool and pool house for long-suffering homeowners who live in the 33 units that were completed before work on the project stopped.

“I call them pioneers,” said Michael Harwood, associate vice chancellor for the Centennial Campus Development Office. “They’re kind of out there by themselves.”

Developer Craig M. Davis and Comstock Homes partnered as North Shore LLC in 2001 to build 358 townhouses and condominiums on the 15-acre site, which sits at the north shore of Lake Raleigh. But project delays and sluggish sales eventually led to the default of a $2 million loan balance, and the sides ended up suing each other in federal court.

Davis, who developed most of the commercial buildings on Centennial Campus, ended up winning the rights to build more homes in 2007 after an 18-month legal skirmish. By then, however, the housing market had begun to cool.

After several years of trying unsuccessfully to sell more units in the project, Davis and the university began to extricate themselves from the deal in 2010. The process wasn’t complete until last year.

“This is a story where everybody lost,” Harwood said. “Craig Davis certainly lost. The university certainly lost a lot of money as well as some damage to the brand. The homeowners certainly lost.”

University officials ended up soliciting proposals from other developers about how best to go about completing the project. They are now in negotiations with White Oak on a development agreement and a ground lease for the property.

Harwood said this time around the university is breaking up the project into smaller phases.

“It gets cumbersome but that’s the best way to mitigate everybody’s risk,” he said. “Keep the bites small. Don’t try to chew too much.”

Gammon said White Oak’s project likely won’t have the density that the earlier plan did. He said it could ultimately have anywhere from 200 to 225 units.

The first phase only covers about half the 15-acre site. It calls for 44 townhouses priced between $170,000 and $250,000. Gammon said White Oak plans to build the first 10 near the pool on spec. The remaining 67 units in the first phase could be condos if that market improves over the next year.

“We’ll just see what sells well and go from there,” Gammon said.

Centennial Campus activity

White Oak is restarting the project at a time when the 1,100-acre research campus is seeing a flurry of new development.

Cary-based Capital Associates is now constructing The Greens at Centennial Campus, a 292-unit apartment complex that is expected to open this fall. The new James B. Hunt Jr. Library opened in January and a 1,200-bed student housing complex is also expected to open this fall.

“There’s a lot more seven-day-a-week traffic and it’s about to become 24-hour traffic with the student housing project,” Harwood said.

Like Capital Associates, White Oak is hoping its units will appeal to both university employees as well as private sector employees who work on the campus.

Although Red Hat is moving from Centennial Campus to downtown Raleigh, the fast-growing telecom company Bandwidth has already subleased one of its buildings. Bandwidth, which employees about 325 employees, has added 65 workers just since October. ABB, the Swiss energy conglomerate, also employs several hundred people on Centennial Campus.

And while the North Shore deal between Craig Davis and the university didn’t work out, Davis’ company, Craig Davis Properties, is still involved in plans to build a new 150,000-square-foot office building on Centennial Campus. The building, to be called Alliance Center I, has been on the verge of getting built for several years.

But Harwood said Davis and his partners are close to nailing down an anchor tenant and moving ahead.

“We’re very close; they’re working on that right now and getting the financing and everything lined up with their lead tenant,” he said. “By May 1 they should be under construction.”

Bracken: 919-829-4548

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