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Real Estate - Commercial

Fourth Street Activity Picks Up

By J. Elias O'Neal, posted Nov 8, 2013
An increase in construction activity includes the City Block Apartments project (foreground) and CFCC Humanities and Fine Arts Center. (Photo by Jeff Janowski)

For nearly 30 years, Jim Quinn has watched North Fourth Street’s vision and development potential wax and wane with the times.

Quinn worked closely with the late Harry L. Fordhen Sr., who spearheaded efforts to transform and redevelop the North Fourth Street area, as a member and former president of the Downtown Area Revitalization Effort in the early 1980s.

But despite public and private investment, including an extensive streetscape project by the city, a possible grocery store and the promise of private entities to turn blighted property in the area into commercial redevelopment projects, North Fourth Street remained slow to catch onto the wave of redevelopment and commercial activity other sectors of the central business district experienced at the time.

“The city had come in with the understanding to rejuvenate the North Fourth Street corridor,” Quinn, a former city council member and current broker with Wilmington-based Creative Commercial Properties Real Estate, said of the area. “For some reason it never really took off.”

Despite the relocation and construction of PPD’s world headquarters blocks away on Front Street, the redevelopment of the St. Andrews Church into the Brooklyn Arts Center and a handful of condo projects that were actually delivered prior to the real estate bust in the late 2000s, activity along North Fourth Street lost some of its steam. 

But things might be picking up again.

Spurred by recent construction projects on North Third Street, area brokers and developers are finally seeing activity increase along the North Fourth Street corridor, with nearly a dozen parcels fronting North Fourth Street either having sold recently or under contract.

And with continued private and public reinvestment occurring blocks away from the area, brokers feel confident that the momentum is here to stay.

“It’s great to see new money and faces reinvesting in the area,” said Dave Spetrino, president of Wilmington-based Plantation Building Corp. “It’s been slow, but it’s never stopped.”

Parting parcels
More than five parcels, mostly small and noncontiguous, have been sold along the North Fourth Street corridor, according to regional commercial MLS data and area brokers involved in the transactions.

Hansen Matthews, a partner and principal broker of Wilmington-based Maus Warwick Matthews & Company, said a lot of the new parcel sales were the result of adequate pricing for the parcels – the result of bank-owned property gaining traction in the market.

In September, Matthews sold three downtown parcels along Davis and Cowan streets that were owned by Charleston, S.C.-based First Federal Bank. He also sold another parcel at 1113 Cowan St. that was held by Atlanta-based SunTrust.

While Matthews did not disclose how much the lots sold for, he said many of the lots were sold for much less than their listing prices.

“Several bank-owned properties have either sold or are still for sale in the area,” Matthews said, “many with prices that are a fraction of what they were at the peak of the market in 2006.”

The North Fourth Street corridor was ripe for residential and commercial condominium development at the height of market, Quinn said.

It was appropriate at the time. PPD officials had announced plans in 2005 to construct a new 12-story office building in the area that would house nearly 1,800 workers, and the Wilmington Convention Center was in the works – meaning that more people and business would flock to the area.

And regional developers were ready.

Downtown and North Fourth Street condo developments, such as The Meridian, The Elbow and Brooklyn Building, began making their rounds in the region’s development circle, pitching prices that ranged from $300 to $800 per square foot.

With the promise of new development surging, parcels along the North Fourth Street were listed for astronomical prices – including a 20-foot by 35-foot lot that was listed for $80,000, according to MLS records.

“Some of the prices were approaching what you would pay in New York,” Quinn said jokingly. “All it really did was drive up the values in the area and made land expensive to buy and develop.”

But when the region’s sizzling real estate market went bust, a number of the properties that were slated for development in the North Fourth Street area were either returned to the bank or sold – many times at a loss – to another developer that simply sat on the property or unloaded the asset at their disposal.

“That sent pricing down,” Quinn said. “Now, what you’re seeing are people coming back into the area looking to reinvest.”
Quinn should know.

He recently sold a 0.098-acre lot at 802 N. Fourth St. for $100,000 – down from its peak asking price of nearly $300,000 during the real estate bonanza. Quinn also has a 0.42-acre lot at 722 N. Fourth St. listed at $699,000 – down from $1.2 million in the mid-2000s.

“The site is seeing a lot of interest,” Quinn said.

Hank Adams, a broker with Wilmington-based Coldwell Banker Commercial Sun Coast Partners, currently has a 0.602-acre tract owned by Park Sterling Bank under contract at 806-816 N. Fourth St.

While Adams did not disclose the buyer or the future plans, he said the six contiguous parcels that mostly front North Fourth Street had an asking price of $294,500 – down from its peak asking price of $1.2 million in 2008.

“There has been a lot of interest in the property since the convention center was constructed, but at the time, no one has been able to afford it,” Adams said. “I think the people that have this property under contract are going to have a prime piece of parcel in the future.”

Noticeable investment
The catalyst behind North Fourth Street’s revival and continued investment interest can be easily tracked to continued private and public investment in the immediate area.

One of the most noticeable private investments is the 112-unit, $12 million City Block apartments, currently under construction at the corner of Third and Brunswick streets by Wilmington-based South Eastern Real Estate Services Group.

Spetrino said bringing new residents to downtown Wilmington is going to drive additional demand for commercial and office services to area – placing increased interest on the North Fourth Street area to accommodate new commercial ventures and residents.

“The last time an apartment was built in downtown Wilmington was in 1906,” Spetrino said. “It is a game changer for downtown.”

Spetrino added that the $10.4 million in road and infrastructure improvements to Third Street, the construction of Cape Fear Community College’s $40 million Humanities and Fine Arts Center and the continued momentum of the Northern Riverfront Marina and Hotel project are also enticing investors back to the area.

Spetrino’s firm is also taking note of the momentum by building townhomes on infill lots in the North Fourth Street area, including NoFo 9 – a duplex style townhome project under construction at 302 N. Brunswick St.

“We’re looking at some opportunities on Fourth Street,” Spetrino said. “But we don’t have any plans to construct anything at this time.”

Jeff Hovis, a broker and Realtor with Wilmington-based Intracoastal Realty, currently has a 0.269-acre parcel for sale at the corner of North Fourth and Bladen streets that was once slated for 24 residential condo units. He said investors with deep pockets from as far away as Ohio and Atlanta are interested in the parcel.

“They are encouraged by the continued investment in the area and by how affordable the pricing has become,” Hovis said. “Some are interested in buying the entire block for future development.”   

Cal Morgan, who oversees real estate appraisal and consulting operations at JC Morgan Co.’s Wilmington division, said with the decline of land prices, it’s becoming easier to execute deals in the North Fourth Street area.

“The potential to profitably develop in the area is more realistic,” Morgan said.

Spetrino said he expects the continued growth and interest to continue.

“People are moving into that neighborhood,” he said. “It has its peaks and valleys, but as new and fresh players come on board and tap into the area’s potential, it will continue to grow.”

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