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WilmingtonBiz Magazine

A Time To Transform

By Cece Nunn, posted Apr 6, 2018
With plans multiplying and earth turning throughout the Cape Fear region, the area is on the precipice of a new wave of development that could determine how the community grows for decades to come.

Developers are working on major commercial projects that could have the same impact as Mayfaire, the ground-breaking mixed-use development created in Wilmington more than 14 years ago.

The results of these plans could be transformational, and the shape of commercial real estate regionwide could depend on the decisions faced this year by residents and leaders.

“Rewriting the DNA of a city is essentially what we’re doing. We are redrafting the DNA that describes how our city will be built. That affects every property owner, every landowner and every business owner. It’s an enormous task that is not done but probably once or twice in anybody’s lifetime,” said Glenn Harbeck, director of planning, development and transportation for the city of Wilmington.

That’s what Harbeck told Wilmington City Council members earlier this year about the city’s current effort to rewrite its land development rules.

It’s a statement that could also refer to the current choices a number of community leaders and property owners are making or facing, in the city as well as in New Hanover, Brunswick and Pender counties, as to how they want to see the future of development unfold in the region.

With growth comes more traffic, closer scrutiny of urban sprawl and aging properties and the need to update a community’s rules regarding development. As new development codes are in the works by local officials, projects under construction and in the planning stages could serve as catalysts for additional growth.


Organic Growth

Some recent activity is coming from existing businesses.

In one example of a major project, a third building and a parking deck with a fitness center (shown below) are under construction at the headquarters of Live Oak Bank, while the company is moving forward with plans for a fourth building and possibly more structures. The third building will hold additional employees for the rapidly growing firm, one of the largest SBA lenders in the country, and the aim with the fourth building is to foster multiple companies like Live Oak spinoff nCino, a banking software firm that grew to a company valued at $1 billion in five years.

Live Oak owns 25 acres of land at its campus on Tiburon Drive in midtown Wilmington, with the possibility of being able to acquire more of surrounding land that belongs to longtime Wilmingtonians and development influencers the MacRae family.

“So we’re just getting started,” said Live Oak CEO James “Chip” Mahan.

In New Hanover County and the city of Wilmington, the amount of developable, vacant land continues to shrink, a fact officials have been concerned about for several years.

A 2014-15 analysis by the city showed 5,800 acres of potentially redevelopable land and 3,600 acres of potentially buildable vacant land in the city. Additionally, New Hanover County is the second-smallest county in the state.

As a result, infill and redevelopment will be key words moving forward.

Current major redevelopment projects in the works include transforming the former site of the Water Street parking deck into River Place, a public-private partnership between the city and Chapel Hill-based East West Partners that will create a new parking deck, apartments, condominiums and commercial space in a 13-story building in downtown Wilmington.

Meanwhile, the planned 1 million-square-foot CenterPoint development by Swain & Associates, a Wilmington-based firm, is an example of a major infill project that could be on the horizon.
“Infill development will very much be a very critical component of how the city looks in the next 20, 30 years,” Wilmington Mayor Bill Saffo said. “I think that’s why this rewrite of the development code is critically important.”

Growing Up

As with River Place and CenterPoint, the buildings will be higher, and one of the major reasons behind that is the cost of land.

David Swain, founder of Swain & Associates, said land on Military Cutoff Road that might have cost a developer about $150,000 an acre 15 years ago would be more like $700,000 to $1 million an acre today.

Developers are counting on being able to do more with less.

“This is a 23-acre tract of land,” Swain said of the site off Military Cutoff and Eastwood roads where CenterPoint is planned. “In the past, for instance, The Forum (the existing Military Cutoff shopping center that Swain developed in 2003) is on about 21 acres. It is all one-story except for two or three two-story areas within the complex, but that was a project that was developed 15 years ago. You would not develop that now.”

A developer has to plan higher buildings “to generate the revenue stream that will accommodate the cost of our land,” he said.

But The Forum was also developed with the future in mind, said Jason Swain, David Swain’s son and developer with Swain & Associates.

“He built a shopping center, which is a big step up from anything else that really anyone else in the state was doing at the time – the copper dome, the outside green areas, the artwork … all these things were designed to create an experience, to elevate the style of commercial real estate in our community,” Jason Swain said.

CenterPoint, he said, “is the next evolution for our industry.”

“I think you will see this standing 100 years from now. It will be like some of the 100-year-old buildings downtown,” David Swain said. “They’re obsolete in some of their features, but CenterPoint will be a focal point because it’s in such a strategic location to the community.”

Another major project, The Avenue, is a $200 million mixed-use proposal on Military Cutoff that would be anchored by a Westin hotel and conference center. As of press time, The Avenue developer The Carroll Companies was seeking a development agreement and a special use permit from the city of Wilmington, along with filing for a rezoning request to change the project’s 44-acre site from having a mobile home park designation to an urban mixed-use zone.

In addition to the 75-foot Westin on The Avenue, the development is expected to include an upscale spa, apartments, class-A office space, fine dining, unique retailers and exclusive boutiques.

Development agreements can memorialize the promises a developer makes, said Roy Carroll, president and CEO of The Carroll Companies. He said The Avenue will have a 10-year build-out schedule.


Looking At Land

New Hanover County’s largest landowners, which according to property tax records include members of longtime Wilmington families the Camerons, the Trasks and the Corbetts, will continue to be factors in the city’s future. The Camerons and Trasks in particular have had a major influence on the commercial and residential development of New Hanover County for several decades.

“They’re going to have obviously a very big role to play. It’s a small geographic area; land availability is scarce,” Saffo said. “The land that is
available has become very expensive, and how they (large landowners) develop (their property) is going to be very important to the elected officials because it’s going to basically determine how the city is going to look and set the precedent for how future infill development takes place.”

One owner who wants to develop a larger piece of land can lead to a better development plan in some cases, said Wayne Clark, planning and land use director for New Hanover County.

“Oftentimes, it’s a lot more difficult to take 50 or 60 individuals and come up with a cohesive product. You can still make it work with a bunch of individuals, but it’s a little more complicated that way,” he said.

In North Carolina, rezoning land requires analyzing whether the change is consistent with local long-range plans.

“It’s easier to do that when there’s large landowners like we have here because they were part of the process. When the future vision was put out there for what’s going to happen, they were part of the conversations,” Clark said, referring to the public meetings that took place before the county’s first Comprehensive Plan was adopted in 2016.

The plan is being used to rewrite the county’s antiquated development code, which dates back to the late 1960s and early ’70s. Both the city and the county are rewriting those plans, aiming to work in tandem so that the development rules aren’t completely different, an outcome that wouldn’t make sense or serve those trying to use them, officials say.

Donna Girardot, chairwoman of the New Hanover County Planning Board, said the new development rules result in a better system.

“I think it will allow us to adopt more flexible codes. I think it will streamline the permitting process, which of course equates to less cost on the developer, which equates to less cost on the buyer whether it’s residential or commercial,” Girardot said. “And I think it opens up many more options for us for development patterns. If you noticed in the comp plan, there’s a lot more mixed use out there. Of course with mixed use comes retail and commercial and that type of thing and density. That’s what I mean by making more options available to us for development.”

The Unified Development Ordinance in the works won’t be driving development, she said, but rather guiding it.

“The market and the property owner, the landowner, will drive the market,” she said.

It will also allow developers “to try new things, new cutting-edge development patterns and things like that, that in the past they might have not felt comfortable in trying because of all of the regulation and all of the time and money that it was costing them,” Girardot said.


Transformation In Progress 

In some spots, projects that could change the development landscape are already underway.

Bruce Cameron Jr., who died in 2013, once told Anne Brennan, executive director of Cameron Art Museum, that he believed Wilmington’s midtown would one day become a new downtown.

Cameron Properties Land Co. of Wilmington and Collett, a Charlotte-based retail development firm, are co-developers of The Pointe at Barclay, a movie theater-anchored entertainment and dining complex at South 17th Street and Independence Boulevard in midtown. The Pointe is surrounded by additional Cameron developments such as Element Barclay apartments (in partnership with Childress Klein Properties, also of Charlotte) and The Forks at Barclay (in partnership with Trusst Builder Group), a neighborhood next to Cameron Art Museum of single-family homes and townhouses.

The Pointe is 34 acres, part of a 150-acre master-planned development.

Another part of the Cameron family is planning a development project on Shipyard Boulevard. Graham Cameron Land LLC has proposed two, three-story buildings that would include medical and professional office space and a restaurant.

The development activity in midtown Wilmington, and nearby along River Road where RiverLights is taking shape, represents one site of major growth, while others include northern New Hanover County in Ogden and Porters Neck.

In Brunswick County, buildings are on the rise in the northern town of Leland, and new businesses are coming to more southern Brunswick towns of Shallotte, Southport and St. James. Rooftops are increasing in the Pender County community of Hampstead, and with those rooftops, commercial brokers expect a rise in interest from businesses wanting to locate where the residents are.

Not all property owners will make the most of what they own. Some properties still languish even 10 years after the recession.

In some cases, the owners of older properties that were built under a different set of rules three and four decades ago will find redevelopment difficult, Saffo said.

For example, stormwater regulations can have a major impact on whether someone chooses to redevelop an aging strip center or not because the calculations for how much of that runoff from rain and snow that a developer needs to manage are vastly different than in days past, if they existed at all.

“That’s why you see some reluctance to redevelop because of the cost,” Saffo said.

Investing In Property

Although necessary to maintain the natural resources of an area, environmental regulations, particularly stormwater rules, can render a piece of property useless in some cases.

“Environmental regulation change, particularly stormwater interpretation, can be the same as condemnation or confiscation,” said Raiford Trask III of Trask Land Co., whose family has owned land in the Wilmington area for hundreds of years.

That’s on top of the typical cost of aiming to hold on to land from one generation to the next.

“You have to continually reinvest in lan, which can be painful from a cash-flow standpoint, because it’s typically buy it and hold it and pay the carry cost,” Trask said.

Reinvesting can mean developing parts of the land to diversify a family’s asset base, he said.

Trask’s current projects in New Hanover County include Autumn Hall on Eastwood Road and Renaissance Market, a new retail center under construction at Military Cutoff Road and Sir Tyler Drive. The retail center, which Trask Land is developing in partnership with Harbour Retail Partners, will be anchored by a newto- Wilmington organic grocer, Earth Fare, and boat supplies business West Marine.

The Renaissance Market site has been owned by the Trask family since 1956, Trask said.

Trask Land is working on a new acquisition, property in Scotts Hill, for a master planned community called Blake Farm, although the residential portion of the development was, as of press time, tied up in a legal dispute with Trask Land’s partners in the project.

Trask said his firm is getting closer to being able to announce some commercial tenants for the Pender County development, which he hopes could still include a branch of the state aquarium system.

In the meantime, new development is coming to Autumn Hall, the Eastwood Road mixed-use community that replaced a golf course. Those additions to Autumn Hall could take the form of new office space, building on the success of the Dungannon Village office building that opened there last year.
 

To see the rest of WilmingtonBiz Magazine, visit WilmingtonBizMagazine.com.
 
(Key to photo grid above) 1. Aspen Heights; 2. The Pointe At Barclay; 3. Carolina Beach Yacht Basin; 4. Embassy Suites At Wilmington Convention Center; 5. The Galleria; 6. Rehab of 1 S. Front St.; 7. Riverlights Riverwalk; 8. The Offices at Mayfaire; 9. Military Cutoff Traffic; 10. The Pointe 14; 11. The Avenue Rendering; 12. Riverlights Roundabout; 13. Leland Aldi; 14. Vacant Downtown Lot; 15. The Forks Construction
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