COVER STORY, NOVEMBER 2011

ON THE CUTTING EDGE
Plans for mixed-use development The Edge are underway in North Carolina.
Savannah Duncan

A rendering of the more than 800,000-square-foot The Edge, a multiple-use development in Chapel Hill, North Carolina.

In 2014, Chapel Hill, North Carolina, will get the retail development it has been waiting for.  A partnership between Sonny Molloy, Jeff Pape, president of D&A Development & Consulting, and Joe Maguire, president of The Rosen Group, is developing the more than 800,000-square-foot The Edge, a multiple-use project located off of Interstate 40 on the border of the University of North Carolina at Chapel Hill campus.

In 2008, the Town Council of Chapel Hill began to take steps toward bringing new retail development to the severely underserved city by adopting an economic development strategy to grow the non-residential tax base. A lack of availability of zoned land has kept retailers out of Chapel Hill, driving residents to spend their tax dollars in surrounding cities to fulfill retail needs. In November 2010, the council identified two specific goals — to increase absorption of empty space from 70,000 square feet a year to 100,000 square feet a year, and to grow the retail market by guiding development in key areas.

At the same time, Molloy was searching for a development site for a national retailer when he came across a 78-acre parcel of land located at the intersection of three main roads — Interstate 40, Route 86 and Eubanks Road. Although the retailer decided to go in a different direction, Molloy brought Pape to look at the site. 

“He [Pape] thought it would be an optimal mixed-use site that any national retailers would see opportunity in,” says Molloy.

“Part of what is so strategic about [this project] is that we have also been working on a retail development strategy, which takes land use and overlays the market on top of it to see where the best opportunities for capturing retail dollars are,” says Dwight Bassett, economic development officer of the Town Council of Chapel Hill. “This is one of the sites that was included in the evaluation.”

“Chapel Hill has strong demographics, high income levels and a great community where right now people are leaving Chapel Hill and taking their tax dollars to do their shopping and other things that we can bring inside the town boundaries to keep resident in the town, spending their money there,” says Pape.

Molloy agrees that these factors make it an ideal town for this kind of development. “We consider Chapel Hill to be the jewel of the research triangle in the Raleigh-Durham-Chapel Hill Area,” he says.

Bassett spoke to the council committee about sponsoring a concept plan for the project, with the intent to balance the development’s interest with the town’s interest in seeing the development occur.

Pape says the partnership is currently in the entitlement process with the Town of Chapel Hill. “The town manager and I have been working with the developers, meeting with them on a regular basis to guide this plan and help get it to the development process.” Bassett says.

Right now, the plan for The Edge includes approximately 450,000 square feet of retail space, 400 to 500 residential units totaling 350,000 square feet to 400,000 square feet, 80,000 square feet of office space and two hotel sites.

Pape says one distinguishing feature of the project is that it will be primarily a horizontal development. “When you use the term ‘mixed-use,’ the connotation is that it’s going to be vertically integrated and this project will have very little vertical integration,” he says. “It will have retail, residential, office, restaurants, hotels, but all horizontally integrated.”

Recently, the partnership retained The Shopping Center Group as the leasing agent for the retail portion of project, Greystar as the residential partner and Atlanta-based Phillips Partnership as the architect.

“Chapel Hill is a market that has been underserved by anchor and junior anchor retailers for some time,” says Abbitt Goodwin, partner of The Shopping Center Group’s Raleigh, North Carolina, office. “To have an opportunity to create a large format retail center in Chapel Hill is a one-of-a-kind opportunity.”

The retail portion of The Edge has the potential for one to two anchor tenants and between three and four junior anchor tenants.

“It’s the right time [for this project],” says Dawn Prince Hoover, member of The Shopping Center Group’s Charlotte, North Carolina, leasing team. “Because of it’s proximity to Interstate 40, it’s accessible and visible. It’s the best of both worlds for Chapel Hill and a developer. The needs are there.”

Also included in The Edge is a Park & Ride lot, the mass transit system used in Chapel Hill, which already sits on the site.

“[Park & Ride] is a very strong transit system with the highest ridership in North Carolina,” says Bassett. “Tying that in with this mixed-use development could really help make it a viable component of our community.”

The lot currently has around 400 parking spaces, and Pape says that the project includes expanding the lot to between 1,000 and 1,500 spaces.

“The students and faculty at the university access campus by the Park & Ride,” says Maguire. “This Park & Ride that will be part of our project will be the largest one. Having that as a component of our project and having people use the Park & Ride every day, it just all comes together.”

The next step for the developers is finishing getting its entitlements in place and closing on a construction loan. Phase I of the project is expected to break ground in either in December 2012 or January 2013, with completion slated for the summer of 2014. Pape anticipates the first phase will contain the retail portion and some of the residential units, although no solid plan has been set.

“There is tremendous demand for this kind of multiple-use project in Chapel Hill,” says Molloy. “The demand, the feel and the economics give us the feeling that it’s going to be an extremely successful project.”

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