Developer raises bid to $3.5M for city-owned site in downtown Raleigh

The asking price for a city-owned split parcel at 301 Hillsborough Street in downtown Raleigh has risen 13 percent to $3.5 million.

Raleigh is in the process of selling the 1.2-acre site, which currently serves as a surface parking lot for Campbell University Law School.

Bidding started last month when the City Council accepted a $3.1 million offer from The Lundy Group, a Raleigh-based developer.

The council’s acceptance of the offer didn’t grant the property to Lundy, but kicked off a bidding process that could take weeks and raise hundreds of thousands of dollars for the city. Interested parties had a 10-day window to outbid Lundy by at least 5 percent.

Blue Heron Real Estate Opportunity Fund II, LP was the high bidder, offering $3.5 million. The Chapel Hill-based group beat out two other Triangle-area development companies.

Raleigh-based Grubb Ventures, in a joint offer with Florida-based Stiles Corporation, bid $3.3 million. Cary-based Hamilton Merritt bid $3.27 million.

Blue Heron’s offer restarts the bidding process. Interested parties have until Aug. 19 to outbid Blue Heron by at least 5 percent. The cycle will continue until the city fails to receive an offer higher than the one it posted.

The property is highly sought after by developers because of its location. It sits on the corner of Hillsborough and North Dawson streets, walking distance from the state Capitol, Glenwood Avenue and several high-density residential complexes.

Some council members opposed the process for selling the property, saying they’d rather encourage a grocer to move there.

Under the bid process, the council must consider a sale to whoever submits the highest bid and developers aren’t required to disclose details of their plans. A proposed 10-year vision plan for downtown Raleigh suggests bringing a grocery store to 301 Hillsborough or somewhere nearby.

But it might be difficult for developers to build a grocery store on the site because of its shape and the city’s parking requirements. It’s unclear whether a developer is considering the idea.

The Lundy Group wants to build a tower that would include retail, commercial and residential space, according to Jim Baker, the company’s founder. Lundy plans to submit a new bid, said Jon Keener, a team member.

“We’ve been interested in this property for a long time,” Keener said.

Meanwhile, the intentions of Blue Heron, Hamilton Merritt and Grubb Ventures aren’t clear.

Blue Heron declined to comment through a spokeswoman. Its online portfolio includes a range of project types, from apartments in Fuquay-Varina and Chapel Hill to shopping centers in Durham and Charlotte – but nothing in Raleigh.

Grubb has built several residential and commercial projects in Raleigh, and is seeking to build a massive mixed-use project off Glenwood Avenue near Crabtree Valley Mall.

Hamilton Merritt, run by Gregg Sandreuter, is behind the apartment and office project known as The Edison on East Davie Street.

Efforts to reach Hamilton Merritt and Grubb weren’t successful.

This story was originally published August 12, 2015 at 4:53 PM with the headline "Developer raises bid to $3.5M for city-owned site in downtown Raleigh."