The price for a city-owned split parcel in downtown Raleigh rose by $500,000 this week, after a Texas development group bid $4 million.
Raleigh is in the process of selling a 1.2-acre site at 301 Hillsborough Street that now serves as a surface parking lot for Campbell University Law School.
The City Council kicked-off a bidding process last month when it accepted a $3.1 million offer from The Lundy Group, a Raleigh-based developer. Interested parties had a 10-day window to outbid Lundy by at least 5 percent.
Chapel-Hill-based Blue Heron Asset Management outbid two other developers with an offer of $3.5 million. The city then opened another 10-day bidding window – with $3.67 million as the new minimum bid – that ended on Aug. 19.
On Thursday, Austin-based Aspen Heights Partners emerged as the new frontrunner for the city-owned site. The company’s $4 million bid was the highest of five offers and the only bid submitted by an out-of-state developer.
Lundy bid $3.9 million. Raleigh-based Kane Realty, known for its development of North Hills and its recent proposal for a 17-story tower downtown, bid $3.8 million. Grubb Ventures, also of Raleigh, bid $3.7 million. And Hamilton Merritt of Cary bid $3.67 million.
The city is expected to open another 10-day bidding window sometime next week with $4.2 million as the new minimum offer. The city isn’t yet sure which day it will advertise its request for bids, said James Sauls, Raleigh’s economic development manager.
The bidding process will continue until the city fails to receive an offer higher than the one it posted.
Real estate experts say the auction could take months and end with a final bid of $5 million or more.
“I think we’ll see it go for at least $100 a foot,” said Moss Withers, a broker with NAI Carolantic Realty in Raleigh.
The sale of the 301 Hillsborough site could potentially reset the market for real estate in downtown Raleigh, said Marcus Jackson, managing director of urban investments for TradeMark Properties in Raleigh.
“The fun and games are far from over,” Jackson said.
Most of the companies have been tight-lipped about their plans for the property.
Representatives for Aspen Heights, Blue Heron, Kane Realty, Grubb Ventures and Hamilton Merritt declined to comment or didn’t return calls seeking comment.
Jim Baker, Lundy’s founder, has said his group wants to build a tower that would include retail, commercial and residential space.