Real Estate News

Developer faulted for unbuilt student rentals, loan default. What’s next for Hillsborough Street site?

A crane sits atop the stalled construction site at 2504 Hillsborough St., across from N.C. State University in Raleigh in June.
A crane sits atop the stalled construction site at 2504 Hillsborough St., across from N.C. State University in Raleigh in June. cseward@newsobserver.com

What will replace a concrete shell of a building on Hillsborough Street across from N.C. State University is still unknown two years after work halted, but the legal fingerpointing over the project might be over.

An arbitration panel this week ruled that the property developer, and not the construction contractor, was to blame for repeated delays, and so the developer wasn’t justified in canceling the contract.

Also this week, a bank moved to foreclose on the property, where a seven-story student apartment building called Hillsborough Lofts was to be built, for defaulting on its loan. A public auction is scheduled for Sept. 22, when the site will be sold to the highest bidder.

“Wright Construction is grateful these three arbitrators concluded what my client has known all along: This project failed because of the actions of the owner, not Wright or its subcontractors,” said Matthew Bouchard, attorney for the construction company.

Neither Hillsborough Lofts LLC manager Cary Joshi nor the company’s attorney could be reached for comment.

Hillsborough Lofts and Wright Construction signed a contract in October 2014 for a 75-foot-tall building with 10,000 square feet of ground-level retail, next to The Alley bowling alley, which is now a mini-Target, and Two Guys Pizza. A crane was erected over the site near the intersection of Hillsborough and Horne streets in June 2015, and it has remained there, shifting in the wind, ever since.

Hillsborough Lofts terminated the contract with Wright Construction in December 2015 and immediately began arbitration against the contractor.

While it ruled that Wright Construction was not to blame for delays on the project, the arbitration panel ruled against the construction firm’s claims that the developer should be liable for fraud, unfair and deceptive trade practices or defamation.

Craig Jarvis: 919-829-4576, @CraigJ_NandO

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