With the recent sale of two former car dealerships near American Tobacco Campus, downtown Durham is poised to enter a new phase in its ongoing transformation.
Encompassing about 18 acres directly southeast of the Durham Bulls Athletic Park, the land is a blank canvas where developers plan to invest hundreds of millions of dollars building a mix of office towers, apartments, retail and hotels.
The projects are noteworthy both for being in a highly visible location along the Durham Freeway and because they do not involve bringing back to life historical structures.
“Adaptive reuse, the preservation of our historic structures, that put Durham on the map,” said Geoff Durham, president of Downtown Durham Inc. “But these are car dealerships and a large majority of that is surface lots. By all accounts this next wave is going to be kind of skyline altering.”
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The first to move forward is CitiSculpt, which this month began demolition on a portion of its 12.1-acre site. CitiSculpt paid $5 million to acquire the land from Hendrick Automotive Group, according to property records.
The first phase of CitiSculpt’s $400 million project will be a 300-unit apartment community developed by Woodfield Investments. CitiSculpt is also planning two office towers and possibly a hotel wrapped around a parking deck on a 4-acre portion closer to the baseball stadium and near the intersection of Dillard and South Roxboro streets.
Lindsey McAlpine, CitiSculpt’s managing partner and co-founder, said the company’s plans call for two office towers with between 200,000 to 250,000 square feet each. The buildings would be anywhere from 12 to 18 stories. One would be a speculative office building; the other a build-to-suit that could be marketed as a corporate headquarters.
“One of the reasons we were so excited about this site and everything going on in Durham is we see this as really one of the best Class A, headquarters sites in the Triangle,” McAlpine said.
The competition for corporate headquarters is intense, but CitiSculpt believes the visibility of the site and its close proximity to American Tobacco make it unique.
“Obviously, places like (Research Triangle Park) and others are trying to reinvent themselves to have more of an urban environment and we’re just landing in an urban environment, so we got that going for us already,” McAlpine said.
Lack of office space
Northwood Ravin is equally confident about the 6.1-acre tract, known as the Van Alen site, which it acquired for $11.7 million from Scientific Properties in May. Adam Golden, Northwood Ravin’s vice president of development, said the company is in the process of evaluating what mix of uses should be included on the land, which was once home to the Elkin Chrysler dealership.
The developer expects the first phase of the project to move forward sometime next year.
“We view this as arguably the hottest submarket in the Triangle,” Golden said of downtown Durham and the area around American Tobacco. “ ... There’s a unique energy in Durham that’s been created and is in the process of being created.”
The development of the two sites couldn’t come at a better time for downtown. The area has very little vacant office space, and American Tobacco’s office buildings are now 99 percent leased.
“We have a 93 percent occupancy rate in downtown, and that’s kind of bordering on being not necessarily healthy,” Durham said. “We’re in a situation where if there’s a user looking for 50,000 square feet of contiguous space we’re not in those discussions anymore.”
Downtown also risks losing some of its fast-growing homegrown companies if significant office construction doesn’t occur. The success of the American Underground entrepreneurial spaces means Durham today has a stable of startups, some of which may outgrow their current space soon.
“What could be even more detrimental is we’ve got an exploding entrepreneurial scene right now and so far we’ve done a pretty good job of retaining and letting these companies grow in place,” Durham said. “But that 7 percent vacancy is not going to allow for that to happen too much longer.”
Big city living
Both CitiSculpt and Northwood Ravin’s projects are sure to benefit from their proximity to American Tobacco. The challenge is to create projects that blend together and create an urban district that flows from American Tobacco into the Van Alen site and then on to CitiSculpt’s property.
“If the design isn’t done well you have a possibility ... of putting these pieces on an island,” Durham said. “But I think we have good partners that want to take the right strategic approach.”
Golden said Northwood Ravin is talking to CitiSculpt about how the two projects will work together. Once fully built out, they have the potential to create a type of urban living environment that largely doesn’t exist in the Triangle now.
“This is going to be a very dense environment,” CitiSculpt’s McAlpine said. “ ... I see this being more dense than North Hills. ... This is more of a big city environment.”