Building Up Downtown: Several Projects Present Growth Opportunities

BY JENNY CALLISON, POSTED FEB 17, 2023

Several projects coming into focus in and around Wilmington’s Central Business District have the potential to further elevate downtown as a nexus for business, tourism and residence.

Wilmington’s Gateway Project and the prospect of the city buying the Thermo Fisher Scientific Inc. building have the potential to build upon recent additions and buoy existing small businesses in the district.

If the Thermo Fisher deal goes through, several hundred new occupants of the 12-story office tower at 929 N. Front St., which had served as PPD’s headquarters, would potentially patronize downtown eateries, retail shops and services. Kelli Jordan, president of the Downtown Business Alliance, said the impact of the central business district continues to push northward, overlapping the northern riverfront area.

“It’s very walkable,” said Jordan, with downtown-based Studio Three Architects. “One thing that’s a strength of downtown Wilmington is the number of independent businesses. There’s so much density and variety, extending through the Cape Fear Community College campus. Having more businesses will encourage others to build, renovate – to go to where the people are. The Gateway project and possible purchase of the former PPD building are in line with that.”

The city of Wilmington has tapped East West Partners as its private counterpart to develop the Gateway, a multi-block, mixed-use project near the city’s northern entrance. The three-block span bordered by Front and Third streets could see a hotel, grocery store, more than 30,000 square feet of retail space, parking and residential units.

“We’re excited about the project and think we have a way forward, something that makes economic sense as well as sense from a city planning perspective,” said McKay Siegel, a partner at East West. “Having retail on the north end of downtown is important to show [the district’s] viability. We have an opportunity to show something there besides apartments; hopefully we’ll be able to bring something cool.”

The Gateway would be more than a strong architectural statement to visitors entering downtown Wilmington from Martin Luther King Jr. Parkway and the Isabel Holmes Bridge. It could potentially attest to the city’s economic vibrancy and provide more hospitality options.

“New Hanover County has traditionally been a strong leisure destination, even as we build convention business,” said Kim Hufham, president and CEO of the New Hanover County Tourism Development Authority. “One of the trends that emerged during COVID that continues today is increased demand in the leisure travel sector. As a result, room blocks available for some meeting groups is reduced, thereby creating shortages of available room blocks that could result in a loss of potential business. Additional hotels in the Convention District could provide additional rooms that can help attract and accommodate larger groups.”

The county’s Room Occupancy Tax (ROT) collections are one way to gauge the level and impact of tourism and business travel. Since the convention center opened in late 2010 and the downtown area – and beyond – has seen the arrival of new hotels, those numbers have grown. In 2011, ROT collections totaled just over $412,500. In 2021, as the pandemic ebbed and travel returned, county ROT totals were about $992,000. Last year, they climbed to just over $1,339,000.

The Gateway, with its proximity to entertainment venues Riverfront Park and Live Oak Bank Pavilion, “has the potential to hit big and bring some energy down there that, if we don’t do it now, we could turn the wrong corner,” said East West’s Siegel.

East West is ready to bring a proposed memorandum of understanding (MOU) for the public-private partnership before Wilmington City Council later this month, Siegel said, explaining that the MOU would lay out goals and general terms, with a formal legal agreement coming later.

“I’ve been surprised at how quickly the city is working,” Siegel added. “From the time the MOU is approved, we have 90 to 120 days to reach a planned development agreement. Then there would be maybe a year of design and permitting. Optimistically, we could have groundbreaking in mid-2024. Then it will take two to two-and-a-half years to build out the project.”

Another change with a large impact potential for downtown is a proposal for the city to purchase the Thermo Fisher building.

“We’ve been talking about a new building, or housing city employees in one building, for 20 years,” Wilmington Mayor Bill Saffo said, adding that a replacement evaluation of the city office building at 305 Chestnut St. with a new facility and parking deck would run $90 million to $96 million. That idea was shelved by city officials, who decided to wait for a more favorable economic climate.

But with area growth necessitating a larger city workforce, last April the city spent $11 million to purchase the office building across Third Street from city hall, where the city was already renting overflow space.

The building addresses three specific needs, the mayor said.

“There are 371,000 square feet of space, more than adequate for our needs. We could [occupy] at least half of that building,” renting the rest to other tenants, according to Saffo.

The second plus is the building’s parking lot, which would provide parking for employees during the day and for Riverfront Park patrons and concertgoers on evenings and weekends. It would connect the Gateway with the stretch of the CBD farther south.

Third, Saffo said, is the need for increased security – not to mention networked IT – for the city workforce.

“It’s extremely difficult to do when you have employees scattered throughout the community. Cybersecurity has become a critical need for government, higher education and business. The Thermo Fisher building has a lot of cybersecurity capabilities that we would not have to install.”
Thermo Fisher “seemed to like the offer” the city made for the building, Saffo said, adding that city officials are now assessing how much of it they would use, and how they might divest the city of the eight buildings and about 6 acres of land it owns. Proceeds from those sales would be applied to the cost of the Thermo Fisher purchase, and, theoretically, any property sold by the city would be returned to the tax rolls.

The state’s Local Government Commission (LGC) would have to sign off on the deal before it could be made a reality. A downtown Wilmington proposal that hit an LGC snag over financial details, Project Grace, is the subject of renewed momentum as Wilmington-based Cape Fear Development looks at reviving the redevelopment idea. The project would transform the downtown block bordered by Grace, Third, Chestnut and Second streets into a mixed-use complex with public and private facilities, including space for commercial tenants.

With more people living and working downtown, there’s greater organic support for a proliferation of businesses, said Cheryl Hartsoe, general manager for downtown’s The Cotton Exchange.

Not only is the multi-tenant Cotton Exchange full, but those tenants represent a more diverse range of businesses than ever, from a distillery to artisan crafts gallery, Hartsoe said, adding that a couple of longtime tenants are launching additional businesses within the property.

“I live, work and play downtown and am a firm believer in all it has to offer,” she said. “There are music, plays – so much to offer here. As [the CBD] expands north with development, which will include offices and retail, we [The Cotton Exchange] want to be good stewards. We want to be a driving force in bringing people downtown and want to be a good neighbor. It makes us all stronger.”

Terry Espy, a commercial real estate broker and owner of MoMentum Companies and former president of the DBA, noted the attraction and proliferation of downtown restaurants.

“We’ve got a wonderful Latin fusion restaurant going into Pier 33, coming in from Charleston,” she said. “The rent rates in Charleston are $50 to $75 per square foot; we’re about $30. Charleston has gotten so expensive, independent businesses have a hard time affording it. Our downtown loves independent restaurants and businesses. Other places, nobody knows the next-door guy’s name: in downtown Wilmington, we have a Cheers mentality.”