An Atlanta-based developer wants to demolish the Velvet Cloak Inn on Hillsborough Street and replace it with a 150-unit student housing complex.
Peak Campus, a 5-year-old company that manages more than 90 developments around the country, filed plans with the city for its project last month.
The plans call for enough beds to house about 500 residents, with 82 of the proposed 150 units having at least four bedrooms. The bulk of the remaining units would feature either two or three bedrooms. The project would also include a parking deck and amenities, including a pool.
Peak manages six properties in North Carolina, including the Level 51 Ten apartments in Durham.
Never miss a local story.
Jeff Githens, Peak’s president of development, said the company was drawn to the site by its 2.5-acre size and the zoning, which allows for the project it has proposed. He said the project would be similar to developments Peak now has under construction in Charlottesville, Va., and Columbia, S.C.
Githens said Peak has already acquired the property, which was previously owned by Raleigh developer David M. Smoot. Peak hopes to open the project in the summer of 2017.
Smoot paid $3.2 million in 2004 for the 2.54-acre site, which includes the inn and two parking lots, one adjacent to and one across from the hotel. He refurnished the hotel and had plans to sell about half the inn’s more than 170 rooms as condominiums. After selling several dozen, those efforts stalled.
Peak is the latest student housing developer to propose a project along Hillsborough Street. Those projects have varied in size, from a handful of beds to several hundred.
FMW Real Estate, a Charlotte developer, has built several communities just east of the Velvet Cloak, and plans to soon break ground on an 85-unit project behind the IHOP Restaurant.
Further west on Hillsborough, Valentine Commons, a 10-story, 928-bedroom complex at Hillsborough and Dixie Trail, opened in the summer of 2012. And Stanhope Center, Kane Realty’s 882-bed student housing complex, opened last summer.
Another Georgia-based student housing developer, Landmark Properties, also wants to redevelop a 3.2-acre site along Hillsborough that is now home to the offices of the online book publisher Lulu.com.
Githens said Peak isn’t concerned about supply outstripping demand along Hillsborough.
“If you look at the new properties on Hillsborough Street their absorption has been very strong, their occupancy has been very good,” he said. “We think there’s strong demand for the Hillsborough Street corridor.”
The Velvet Cloak site’s location between the N.C. State University campus and downtown may make it particularly appealing to students. The property is also adjacent to the Alexander Family YMCA, which reopened in 2008 in a new $17 million building.
While its condition has deteriorated in recent years, the Velvet Cloak has produced its share of memories.
The hotel, which was built in 1963 by Raleigh developer J.W. York, has been a popular venue for political events, weddings and lodging for people visiting NCSU two blocks away.
It was also a popular lodging spot for lobbyists and lawmakers because it is near the Legislative Building and other government offices.