WILMINGTON — A mixed-use development slated for downtown Wilmington is inching closer to being finalized, following a four-year hiatus.
The price has increased drastically and the breakdown of amenities has been updated since the Gateway Project, a public-private partnership between the city and developer East West Partners, was first announced in 2019.
Between the Covid-19 pandemic and the city’s recent purchase of the Thermo Fisher campus, plans were put on hold. East West Partners project manager McKay Siegel told Port City Daily negotiations were picked back up last summer.
East West Partners is looking to purchase city-owned land in northern downtown to construct a massive development, as the “gateway” or entrance to Wilmington. They will transform seven parcels at Front and Third streets, an increased footprint from its initial plans.
“The north end of downtown is right there at a turning point,” Siegel said.
He pointed to Pier 33 waterfront apartment complex and mixed-use development River Place, also constructed by East West Partners.
Originally, the Gateway Project was estimated to cost $90 million total. Siegel said he’s now estimating it’s closer to $110 million just for one half of the project to come to fruition. It will contain residential units, retail and limited office space at the corner of Third and Harnett streets.
On the second portion of land, north of the Thermo Fisher building, the group is looking to build a hotel, which it does not have estimated costs for at this time.
The city and East West Partners are working on a purchase and development agreement to spell out what would be built and when, along with the value the city would receive in return, city spokesperson Jerod Patterson said.
Patterson also said the pandemic created “uncertainty around certain market conditions,” which are just now starting to normalize.
The developers and city signed a memorandum of understanding in March, yet site plans will still need Wilmington Planning Commission and ultimately Wilmington City Council approval before moving ahead.
East West Partners is looking to purchase 901 N. Third, 922 N. Front, 908 N. Front and 1021 N. Front streets from the city. It also plans to buy 909 N. Third and 923 N. Third streets from ILM Downtown Holdings LLC, owned by Raiford Trask III.
Teaming up with Trask, East West Partners is trying to secure additional parcels, so the development will comprise an entire square, as opposed to an L-shaped construction.
Siegel said East West Partners has been working closely with Trask for a little over a year; whether the partnership will be formalized or not has yet to be decided.
“We’ve got a good relationship and an open dialogue,” Siegel said. “I’m sure their property will add to the success of that block.”
The developer will construct the amenities in two phases — referred to as the north end and south end. Though Siegel noted the second won’t begin too far after the first breaks ground.
As East West Partners is dusting off its plans, which Siegel noted are still fluid, the developers have made some changes to its potential offerings, reducing office space and parking. Siegel attributed the updates mainly due to the city’s new $68-million purchase of the 12.5-acre Thermo Fisher campus on Front Street.
The city plans to occupy five floors of the 12-story building, lease out two floors to Thermo Fisher and rent out the remaining space at market rate.
“Office in general is not doing great as far as real estate,” Siegel told PCD on a call last week. “Really, it’s hard to fund — if we could fund it at all, frankly.”
With the Thermo Fisher building right across the street from the future build, East West has cut office space down to 65,000 square feet from 100,000 square feet announced four years ago.
Initial plans also included 72,000 square feet for a hotel, 17,000 square feet for retail space, a 9,000-square-foot visitor’s center and a 31,000-square-foot grocery store.
The 2019 plans proposed 204,000 square feet of residential units, with 5% set aside as affordable, and 700 parking spaces.
When the city purchased Thermo Fisher’s campus, it came with a 1,022-space parking deck. East West Partners has decided to reduce the size of parking it offers. The city plans to utilize the new deck on Front Street for public use.
“Early, early on we were talking about building parking for the city,” Siegel said. “Having that PPD parking makes it easier for a whole lot of stuff downtown to happen; we were able to shrink our deck and make the best use of that site.”
The proposed plan now aims to build out roughly 625 parking spaces, with 275 public spots provided to the city. An additional 184 spaces will be dedicated to the 168-room hotel planned for the south end of the construction site.
Siegel said there is a bigger draw now for a hotel between the Wilmington Convention Center and concerts at Live Oak Bank Pavilion. It would join Embassy Suites, Hotel Ballast, Hampton Inn Wilmington, Aloft, Best Western Plus Coastline Inn, The Hive, and Arrive already operating downtown. None exist farther north than the convention center.
As stated in the MOU, East West Partners will make available annually blocks of rooms within the hotel at a reduced rate for city and convention center events.
The residential side of the development will feature 320 units instead of the original 194 planned. The city is also negotiating with East West Partners on the number of units that will be considered affordable.
Per past Port City Daily reporting, the company committed to 5% affordable units to household incomes around $72,000 per year.
Siegel explained to PCD the income range is based on the U.S. Department of Housing and Urban Development. For Wilmington’s MSA, the median income — considered the midpoint for an area’s income distribution and different from the average income of $54,746 — is nearly $100,000, according to HUD.
Therefore “affordable” based on 65% of AMI would be a roughly $65,000 household income.
Patterson said increasing the availability of affordable housing “remains a high priority” for city council.
“The city will continue to advocate for including as much affordable housing as is reasonably feasible within the scope of the development,” he said.
According to an internal email obtained by PCD, city attorney Meredith Everhart asked Siegel to consider up to 20% affordable units at 60% AMI.
“If able to get to those percentages, it will provide over $13 million in public benefit and more than cover the price of the land contribution by the city,” Everhart wrote May 26.
“Who’s really downtown?” Siegel said to Port City Daily. “Is it single-income families or workforce positions?”
He said the type of units they build will be determined by the demographics they uncover for who resides there.
“A lot of types of folks don’t mind having a roommate,” he explained. “We can build a unit more comfortable for roommates, that’s going to be different than it is for a four-person family.”
The number of affordable units will also be based on the size of apartments offered. Smaller units mean more can fit. Originally, plans called for 900-square-foot units but size has not yet been finalized.
The retail aspect of the Gateway Project has also been upgraded from 17,000 square feet in 2019 to 35,000 square feet. This would include retail shops and entertainment, primarily on the ground floor.
“Retail at the north end, keeping that activated, has been a struggle,” Siegel said. “We have all these people coming downtown for conventions, for Live Oak Bank Pavilion, and we don’t know that the money is staying downtown as well as it can right now.”
He called it a “tipping point” where Thermo Fisher will engage more employees in the corridor, increasing the demand for shops and entertainment.
“Gateway will bring some energy,” Siegel said. “We really gotta have retail visibility from a high-traffic area.”
He said the mixed-use construction will hopefully “bridge that gap.”
Siegel estimates having negotiations wrapped with the city by the end of summer, following a one-year design period. He hopes for a fourth quarter 2024 groundbreaking, which he said is “maybe not optimistic, but on the optimistic side.”
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