Real Estate News

Northern edge of downtown Raleigh poised to take off

Traffic on Peace Street passes near the site of a developing commercial property Friday at the corner of West and Peace streets in northwest downtown Raleigh. The former lighting store, owned by the Lundy Group at 500 West Peace Street, is being developed for a tech company slated to occupy the building this summer.
Traffic on Peace Street passes near the site of a developing commercial property Friday at the corner of West and Peace streets in northwest downtown Raleigh. The former lighting store, owned by the Lundy Group at 500 West Peace Street, is being developed for a tech company slated to occupy the building this summer. hlynch@newsobserver.com

As land prices rise and new office space remains relatively scarce, development activity in downtown Raleigh is increasingly pushing to the edges.

Technology companies looking to relocate into flexible space closer to downtown are finding their best options may be in converting older, existing buildings away from the downtown core into something that suits their needs.

“They want something different – higher ceilings, open floor plan,” Jon Keener with The Lundy Group, a Raleigh-based developer, says of how these tenants are changing the downtown office market. “They’re looking for a more interactive office space.”

That is what Lundy has created at 500 W. Peace St., the former home of Lighting Inc., which is being renovated to become the new headquarters for Spectraforce, an IT consulting firm now based in West Raleigh.

Spectraforce, along with its sister company Leoforce, expects to move into the 13,000-square-foot building later this month. The building is one of five parcels fronting West Street that Lundy bought in August for just under $2.8 million. The developer also owns a 9,000-square-foot building at the south end of West Street, and it recently acquired, along with partner Hyde Street Holdings, the1.2-acre site at 301 Hillsborough St. from the city.

Lundy’s activity at Peace and West offers the first glimpses of what could be a complete transformation of this area of downtown over the next few years. Across Peace Street from Spectaforce’s new offices, Kane Realty and Williams and Realty & Building Co. control nearly 3.7 acres of land bordered by West that is ripe for redevelopment.

Grocers interested

Publix, the Florida grocer that is making an aggressive push into the Triangle, has been linked to the site, which is within walking distance of hundreds of apartments and condominiums in Glenwood South. John Kane, Kane Realty’s CEO, declined to comment on the joint venture’s plans for the property, saying there is nothing to announce as of yet. Publix didn’t respond to a request for comment. It has said in the past that it doesn’t comment on future stores until a lease is signed.

But several grocery store chains are actively looking at multiple sites downtown.

“There are multiple grocery stores doing due diligence and have done so for several months,” said David Diaz, president and CEO of the Downtown Raleigh Alliance. “I think the odds are really good that it’s going to happen.”

The site owned by Kane and Williams could be ideal for a grocery store once several road improvements are made to the area.

This summer the state Department of Transportation will break ground on replacing the Capital Boulevard bridge over Peace Street and reconfiguring the street grid. The project will also reconstruct the Wade Avenue bridge and add a new landscaped median along Capital.

The project, which is expected to take three years, will eliminate the ramps on the northwest side of the Capital/Peace interchange to make room for Devereaux Meadows, a new park that the city plans to build at the corner of Peace and Capital. Under the new configuration, drivers entering downtown will exit Capital after the bridge by taking a right onto Johnson Street.

City plans also call for Johnson Street to eventually be extended through the block between Harrington and West streets, a move that would create a direct connection from Capital Boulevard into Glenwood South. That extension likely won’t be made until the Kane and Williams property is redeveloped.

Bring history back

In the meantime, Lundy’s redevelopment efforts are being done with an eye toward making the northern end of West Street more pedestrian-friendly. The street has historically been home to an eclectic mix of light industrial businesses.

The goal is to turn West into a lively north-south corridor similar to what is happening a few blocks east on N. Person Street. Property along this section of West Street is particularly conducive to a diverse mix of uses, as its industrial zoning provides flexibility in what can be done.

“That’s what we want to tap into, the pedestrian activity,” Keener said.

Lundy plans to renovate the 707 N. West St. property directly behind Spectraforce’s offices to attract another technology tenant. The building was once home to a trophy parts distributor but has more recently been used primarily as band practice space.

Plans have also been filed to turn a third building Lundy owns, a single-family home at 713 N. West S., into a bar and lounge called The Cardinal. (The site was once the primary parking spot for Cardinal Cab’s fleet of vehicles.)

The bar, which will feature a large outdoor deck with some of the best views of downtown, is expected to open by the end of August. It will be next door to a recently renovated warehouse that is now the offices for Morehead Capital, a private equity firm.

Keener said Lundy’s goal is to salvage as much of the existing buildings as possible.

“There is so little old building stock in Raleigh compared with places like Durham and Greensboro,” he said. “What we’re trying to do is bring that history back.”

David Bracken: 919-829-4548, @brackendavid

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