Grubb Ventures is betting the success it enjoyed with its makeover of a former Winn-Dixie warehouse will carry over to a site across the street at the corner of Atlantic Avenue and Whitaker Mill Road just north of downtown Raleigh.
The Raleigh real estate development firm recently paid $10 million to acquire the former Peden Steel property from the Peden family. The 18.6-acre site includes three warehouses encompassing 152,000 square feet plus a 20,000-square-foot office building.
The plan is to adapt the site along the lines of Dock 1053, the one-time 185,000-square-foot grocery warehouse – A&P used it before Winn-Dixie – that it broke up into space that has attracted a mix of retail, startups and creative types. Tenants include Lynnwood Brewing Concern, neon artist Nate Sheaffer’s studio and Lee Hansley Gallery.
“That warehouse has been extremely successful, really beyond our expectations,” said Gordon Grubb, the firm’s founder and president.
Sam Crutchfield, director of commercial leasing and acquisitions, said Dock 1053’s appeal includes lease rates that undercut the rates charged for comparable brand-new space plus the “cool factor” of being in a renovated warehouse rather than “typical suburban office space.”
“We’ve actually had to turn away a fairly large number of space seekers in the last 12 to 18 months because we just don’t have space at Dock 1053 anymore” for office and retail tenants, Crutchfield said. “We’ve been full there for awhile.”
Roughly half the space at Dock 1052 is devoted to office and retail, with the other half still used as warehouse space. Grubb Ventures hopes to win city approval to convert all the warehouse space at the Peden Steel property into office and retail.
The Peden Steel site is currently occupied by a division of Waste Management that uses it as a recycling center. That lease doesn’t run out for several years, according to Grubb officials, who declined to be more specific.
Although the lease with Waste Management has some “flexibility,” the time remaining on the lease also provides an opportunity “to really evaluate the buildings, put together a plan, get the approvals from the City of Raleigh that we need,” Crutchfield said.
The warehouses at the Peden Steel property have ceilings that are 40 feet to 50 feet high, “so we think we can do some mezzanine or two-story solutions in those buildings, so that 152,000 square feet could end up becoming upwards of 200,000-square-feet-plus,” Crutchfield said.
Grubb Ventures invested $8 million in Dock 1053 and expects to invest significantly more in the Peden Steel site, both because it’s a larger site and also because the firm anticipates including “a residential component” on the property.
The plan for the warehouse buildings is to “save the steel and the foundations. We will most likely need to replace the skin and re-roof, but hopefully the bones of the buildings will remain intact,” Crutchfield said.
Unlike cities such as Durham, Raleigh has “a very limited stock” of old warehouse buildings, Grubb said. “We’re excited that we’re being a partner in trying to save some of those.”