CHAPEL HILL - He’s cut prices and lost some early commercial tenants, but developer Roger Perry says his $120 million East 54 project has been “extremely successful.”
In an interview, Perry said his condominiums are 80 percent sold and his office space 80 percent leased. When new tenants open later this year, his retail occupancy will also hit 80 percent.
The numbers show the town’s mixed-use development strategy is working, said Perry, the president of East West Partners. It’s the same strategy he’s pursuing with Obey Creek, an even bigger project proposed for U.S. 15-501 in southern Chapel Hill (see sidebar).
“To make a broad statement that something doesn’t work because it has struggled in the worst economic situation we’re seen in 80 years is a knee-jerk reaction,” Perry said.
“If you accept the inevitability of growth then how do you accommodate that?” he continued. “You can argue around the edges what the right mix (of development uses) is.”
East 54 is being marketed primarily to pre-retirees and retirees, young professionals, graduate students and people looking for a second home, said Gary Burns, sales director for East 54 Realty.
East-West Partners has cut condominium prices by one-third since East 54 opened in 2009. The complex has 126 homes and 22 remain vacant, though seven units have sold in the last six weeks.
Thirty percent of its units were priced to meet the town’s affordable housing goals – twice the town’s requirement. They were sold through the Community Home Trust to residents who are first time homeowners and earn 80 percent or below the area median income, which is $54,960 for a family of four.
Prices on market-rate units depend on the type of condominium and its location in the complex. From September 2009 to December 2010, they averaged $434 per square foot. Since January 2011 they’s dropped 17 percent to $361 per square foot.
An 860 square-foot, one-bedroom unit is currently selling for $210,000.
Prices at 140 West, the condominium and retail complex being built on West Franklin Street, are still lower than those at East 54.
There are 58 pending listings averaging $301 per square foot, according to Triangle MLS data, a regional listing service for real estate.
Ram Development, the owners of 140 West, say they have sold more than 60 percent of their units, including all their affordable units. The eight-story complex is scheduled to open next year.
Overall, the regional condominium market remains soft, said Stacey Anfindsen, a market analyst based in Cary and president of the Raleigh Regional Association of Realtors.
The average selling price of a Orange County home was $311,000 in 2008 and was $300,000 in the first quarter of 2012, a 3.5 percent decline, according to the Triangle MLS.Lightning rod
East 54 has been a lightning rod for critics of the town’s mixed-use development strategy.
It was built partly on the site of the former University Inn, an old motel near Finley Golf Course with a wide expanse of lawn stretching up from the highway as you entered town.
As the buildings’ steel frames rose along the roadway, many criticized the project as too big and out of scale with its surroundings, especially the quaint Glen Lennox neighborhood across the street.
Perry felt the criticism was unfair. He repeated during the recent interview that he was doing what the town said it wanted.
Originally, he said, the buildings were set back from the road. It was former Town Council member Bill Strom, he said, who pushed for them to be moved closer to N.C. 54 to encourage pedestrian shopping.
“Bill was the 1,000 pound gorilla,” Perry said. “I wasn’t going to get the project approved if I didn’t accommodate Bill and rest of the council and bring it up to the street.”
Perry said it frustrates him with elected officials don’t heed their professional staff’s recommendations.
But he says he has a learned from East 54. His planned buildings at Obey Creek will not look as tall or in fact be as tall measured from street level as East 54. There won’t be a long expanse of building walls fronting the highway.
“We’ll submit something that looks different from that,” he said.Transit, sustainability
If Orange County voters pass a half-cent sales tax to fund a light rail line between Chapel Hill and downtown Durham, that line would be built just behind East 54, between the project and Finley golf course.
That was another reason East 54 was built close to the road, to complement mass transit. It represents the kind of concentrated growth that supporters say could spring up all along future stops on a light rail line, boosting the economy across the region.
Perry said the light rail line would boost foot traffic at East 54, bu he said the project will succeed with or without it.
“Will the transit help it? Absolutely,” he said.
But transit has probably been the third selling point for East 54’s residential buyers, Perry said, after the low cost of the affordable housing units and the condominiums’ low heating and cooling costs (see box).
Perry and his partners recently paid off their construction loan on East 54 from Wells Fargo with no extensions, he said. Retail challenge
If there is one area at East 54 that has struggled, it has been retail.
Streets Deli and Archira, a Thai-sushi restaurant, left the project earlier this year, but two new tenants ate taking their place this fall, Lee Perry said.
Tobacco Road Sports Cafe, which also has locations in Raleigh and Durham, is scheduled to open in September and Elements a new farm-to-table American food restaurant is set to open in August, he said.
Roger Perry said it takes time to build community awareness, as the commercial districts at his Meadowmont and developer D.R. Bryan’s Southern Village mixed-use projects have seen.
He said he still believes belding residential, office and retail makes sense and says the town’s 13 percent commercial tax base demands it – even if it’s not what many Chapel Hill shoppers are used to.
“There’s a reason the country is dotted with strip shopping centers,” he said. “They work. You see them. There’s all that parking.”
“I think what we’re trying to do, what the town is trying to do, what D. R. Bryan is trying to do, we’re trying to do something different ... this kind of mixed use is difficult to make work.”
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