Nearly a decade ago when N.C. State University officials began approaching Hillsborough Street property owners about redevelopment opportunities, there was much skepticism in the development community about the viability of investing along the street.
“We couldn’t get developers to really look at Hillsborough Street with any seriousness, it was all Glenwood South,” said Ralph Recchie, N.C. State’s director of university real estate.
Over the past five years that has completely changed. A $10 million city-financed makeover of a portion of the street, completed in 2010, was a major factor, as was N.C. State’s willingness to buy up a handful of redevelopment sites and help push the process forward. Large investments by Charlotte developer FMW Real Estate, which is behind several apartment projects along Hillsborough, also helped change the landscape.
“Now we have significant investment going on on the street – not just clustered right across from the university – but really spanning the whole business improvement district from Morgan [Street] out to Gorman [Street] and more prospective projects on the way,” Recchie said. “ ... I think we’re outpacing Glenwood South and other areas for redevelopment opportunities and investments.”
Hillsborough’s reawakening will hit a major milestone over the coming weeks, as two of the street’s larger redevelopment projects are completed.
In the coming weeks, students will begin moving into Kane Realty’s $80 million Stanhope Center, an 822-bed student housing complex that includes 30,000 square feet of ground floor retail on the south side of Hillsborough near Dixie Trail. And next month, the 135-room Aloft Raleigh Hotel and restaurant is set to open across from the N.C. State bell tower.
The Stanhope Center is 100 percent leased, and will offer undergraduates a level of luxury that will stun those unfamiliar with the amenity arms race that has broken out among student housing developers in recent years. It features 40-inch smart TVs in each unit, a cyber cafe, a saltwater pool, outdoor grilling stations, and fitness and gaming centers, among other amenities.
Perhaps just as important for Hillsborough Street’s evolution is the center’s retail spaces, which offer high ceilings and large storefronts – the kind of spaces that have really not existed along the street until recently. Those spaces will attract tenants that may not have considered Hillsborough previously; Kane has already leased two of the spaces to CVS and IHOP.
The Aloft Hotel also promises to attract guests who might otherwise have stayed elsewhere in the city.
Diversity of housing
Still, the addition of more nonfood retail and sit-down style dining options along Hillsborough is crucial to the street becoming more than just a place for students to grab a quick bite.
“That’s really the difference between being viable and profitable for nine months out of the year and being such for 12 months out of the year,” Recchie said. “ ... That, I think, is what’s going to draw people more increasingly from Cameron and University Park neighborhoods into the street.”
Also crucial to Hillsborough’s evolution will be more diversity in the new housing projects that are proposed going forward. To date, most of the projects have targeted undergraduate students, a segment that is not really growing as N.C. State shifts its emphasis to expanding its number of graduate students.
The ability of the market to absorb all those undergrad units could become an issue, although a more likely scenario is that the projects proximity to campus means they pull students from other complexes that are farther away.
Recchie is now recommending that developers along Hillsborough build student housing so that it can evolve as the market does. That means limiting, or eliminating entirely, four-bed units and making sure that units have extra insulation between them so that one day they could be marketed to graduate students or young professionals.
Despite the recent activity on Hillsborough, the street still has no shortage of properties that are likely to draw interest from developers. That is particularly true for sites near both the Aloft and the Stanhope Center.
John Kane, CEO of Kane Realty, notes that the city eventually plans to remake the western end of Hillsborough, adding roundabouts and bike lanes that will make it even more attractive to developers.
“We would certainly look for other opportunities,” Kane said. “Hopefully this will spur other areas to be recycled.”