Real Estate - Commercial

How A $90M Gateway Project Could Impact The City

By Christina Haley O'Neal, posted Oct 16, 2019
City staff will begin an exploration phase for the proposed $90 million mixed-use development proposed by East West Partners at the city's northern gateway. (Photo courtesy of the city)
A $90 million mixed-use development proposed for city-owned property could have a huge impact on the northern entrance to Wilmington, a downtown official said Wednesday.

The gateway project, which could include residential units, retail space, a hotel, a visitors center and parking, would greet visitors coming in from Interstate 74, I-140 and U.S. 421 over the Isabel Holmes Bridge or others coming in from Martin Luther King Jr. Parkway, said Ed Wolverton, president and CEO of Wilmington Downtown Inc. (WDI).

River Place developer East West Partners, a Chapel Hill-based firm, proposed the plan for city-owned properties at 1020, 908 and 922 N. Front St. and 901 N. Third St. The Wilmington City Council unanimously gave the go-ahead Tuesday night to take the next steps with the proposal, including allowing the city manager to work on a memorandum of understanding between the city and the developer in an exploration phase.

Since Wolverton took on his role with WDI six years ago, much of downtown Wilmington has gone through a transformation, including the city-owned sites where the development is planned and privately-owned sites within those two blocks. Buildings have been demolished to make way for development at the sites.

"The city's decision to move forward with an RFP for its parcels ultimately led to these other owners to do some site prep for potential redevelopment on their sites as well," Wolverton said. 

East West Partners’ plans for the properties incorporate the city-owned parcels as well as property that is currently owned by Spiro Macris, according to the proposal. The firm’s plans are to develop a combined 4 acres.

The development includes three buildings, and within those buildings, plans are to have a 72,000-square-foot hotel with more than 120 rooms; a 9,000-square-foot visitors center; residential space with 194 units, 5% of which are proposed to be affordable; a 31,000-square-foot grocery store; and parking.

Wolverton said he was curious about how many developers would respond to the city's request for proposals (RFP) since the project has so many moving parts. 

East West Partners was the only developer to submit a proposal in the RFP for the gateway sites.

What came out of the RFP is "inspiring," Wolverton said. 

"When you -- from my six-year perspective -- think about what's been at that lot for the last six years, and maybe the last 10 or 15 years, and seeing something of that substance coming to the site, it is quite inspiring in terms of the progression of the downtown development efforts," he said. "Having striking buildings of this magnitude will really help define a city that is moving forward." 

The proposal is adding a progression of development now occurring in downtown Wilmington, Wolverton said. East West Partners, he said, is taking on yet another complicated project within the city.

The firm is also working on the 13-story River Place development under construction at 200 N. Water St.,  the site of the former Water Street parking deck. The mixed-use development there has a more than $80 million price tag.

The northern gateway project, should it be developed, would be an extension of the more modern developments in the north side of downtown Wilmington, Wolverton said, adding to major projects such as the PPD headquarters building, Wilson Center and the planned North Waterfront Park, along with a host of residential offerings in the area, both constructed or in the works.

Not only the buildings would impact the city's appeal coming into downtown Wilmington, but it would also have "a major impact on the tax values for the community," Wolverton said.

"Seeing the area transition from a place with very little to something that will be much more intense is crucial for our growth as a downtown and also as a city," Wolverton said, adding that the development, with its residential spaces, will push that section of town to be a true 24-hour center, supporting nearby shops, attractions and the local workforce.

The project's value could tick up as the plans do not include the price of building a hotel. Because of the hotel's location and the scale, East West Partners would partner with a higher-end hotel operator for the rest of the development, according to the developer's proposal, which was submitted in late August in the RFP for the land.

The hotel could take the development to over $100 million in investment, city staff said at the council's meeting Tuesday night.

"We intend to sell a pad-ready site with parking to a hotel developer/operator. Thus, we have not included the cost to construct the hotel building," stated the developer's proposal.

That proposal also includes space for a visitors center. The current group that functions in that role, Wilmington and Beaches Convention and Visitors Bureau (Wilmington CVB) is currently located at 505 Nutt St. in Wilmington. 

"We have not been involved in any formal planning. But we have expressed in past discussions with the City that the gateway area would be a great location for a visitor's center. We certainly look forward to finding out more as those plans move forward," Kim Hufham, president and CEO of the New Hanover County Tourism Development Authority, doing business as Wilmington CVB.

For the next step between East West Partners and the city, a purchase and development agreement (PDA) is expected at the end of the exploration phase, city officials said.

Wilmington Mayor Bill Saffo pointed out at the meeting Tuesday that the city staff would negotiate the percentage of workforce housing in the development and the number of parking spaces to a higher number.

An MOU could be developed and go before council for review in mid-February and the PDA could go before council sometime in mid-August, Erris Dunston, assistant to the city manager for economic development, previously said Monday.

“I am super excited about the project and the concept design that LS3P and East West Partners has worked to come up with,” Lucien Ellison, development director for East West Partners, said Wednesday adding that there are still many unknowns ahead of future negotiations with the city.

“It’s another step in the evolution of downtown," Ellison said, "and it’s exciting to see the transformation that’s happened over the last 20 years. It’s equally exciting to see what will happen over the next 5 years and the next 20 years."
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