Office, Retail, and Housing Presentation by Dwight Bassett

By Scott Sherrill, UNC MPA Student

On Tuesday, January 10, 2012, at 6 PM, Dwight Bassett, the Chapel Hill Economic Developer, made a presentation to inform the Chapel Hill 2020 process.

Bassett put economic development in the framework of maximizing revenues as Chapel Hill approaches build-out and making the most of what development potential remains.

In looking at potential uses for property, the highest return on investment comes from mixed-use high rise development and the least comes from suburban sprawl. For a comparison, Bassett pulled an example from Asheville where a big box development brings in $6,600 in property tax and $45,000 in retail sales per acre and a six story mixed-use development brings in around $414,000 per acre total. In terms of costs, Bassett pointed to a 1989 Florida study, which demonstrated that infrastructure costs per dwelling unit were around 2.5 times as much for suburban sprawl as for downtown, more dense units.

To ground his presentation in Chapel Hill, Bassett made reference to three studies office, retail, and housing, in addition to two small area plans, Ephesus Church at Fordham Blvd. and the draft downtown framework.

Office

Chapel Hill has 4-5% of the office market in the Triangle. Chapel Hill has growth potential for 1,000,000 square feet of office space, 600,000 square feet of which has already been approved, but not yet built. The current vacancy is 240,000 square feet which traditionally, since 1979, has been absorbed at a rate of 70,000 sf per year but with a potential absorbtion rate of 100,000 square feet per year. Even so, until a larger dent can be made in the 240,000 vacant square feet, the approved 600,000 approved square feet of new office space is unlikely to materialize. To put in terms of vacancy rates, at present, the office vacancy rate is around 20.4 percent, to see an increase in office space, the vacancy rate needs to fall to 16% or less.

1,000,000 square feet of new office represents 2100 construction jobs, 140 million dollars in construction wages; 2.68 million dollars in new taxes; an additional tax base of 200 million dollars, 5000 permanent employees, 350 million dollars added to the local economy and 4 cents on the Chapel Hill property tax rate.

Retail

The retail strategy overlays land use with demand and attaches growth potential to particular retail areas. At present, Chapel Hill has 1.5 million square feet of retail space; 1 mil square feet of demand is projected for 2020 as compared to 400,000 square feet in demand in 2010. However, Chapel Hill loses 35% of retail sales to other areas.

In 2010, the plan identified 400-600,000 square feet of uncaptured market potential and anticipates 700,000 to 1,000,000 square feet of uncaptured potential for 2020. The majority of leakage falls under the category of department stores, where Chapel Hill loses 47 million dollars in retail sales; however, supermarkets and groceries capture more than 100% of market share, and pull in 180 million dollars from the region.

Housing

The housing study is a benchmarking document which compares property values with Raleigh, Durham, and Cary. Land prices with zoning rights in Chapel Hill average $175,000 per acre, significantly higher than Raleigh, Durham, and Cary. The median sales price of $323,000 is also significantly higher than other benchmarked communities. Home values in Chapel Hill experienced 45% growth between 2000 and 2006.

In terms of future demand, the market demand would be 321-463 annual housing permits for next ten years, and 581-817 between 2009 and 2014 for rental units, including 300-400 units of affordable housing.

The study also breaks down for-sale housing, rental housing, workforce housing, and low-income housing for market potential, and shows a wide variety of potential.

Ephesus Church-Fordham Small Area Plan

The Ephesus Church-Fordham Small Area Plan focuses on the street system and connectivity in the area. The small area plan calls for 250,000 sq. ft. of new retail, 280,000 sq. ft. hotel, 360,000 sq. ft. office, 1000+ new residences. The plan calls for a number of connectivity improvements, but also examines a variety of densities for potential redevelopment. The end effect is that the development runs from 6 stories along Fordham Blvd. to 3-4 stories as it approaches surrounding neighborhoods.

Draft Downtown Framework and Action Plan

The downtown framework focuses on attempting to achieve a greater feel of walkability. The theme of the plan focuses on the key words compact, connections, anchor, and green. To improve walkability, the plan incorporates more cross streets between Franklin and Rosemary to break up some of the long block segments. The cross streets vary in terms of the anticipated traffic as some anticipate pedestrians, some cars some bicycles, some transit, and varied combinations.

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5 thoughts on “Office, Retail, and Housing Presentation by Dwight Bassett

  1. Lynne Kane says:

    Addressing Jeanne Brown’s comment alleging lack of green space in the Ephesus Church Rd-Fordham Blvd. small area plan: Most of the surrounding homes have lawns, garden areas. The apartment buildings in the area also have considerable entrance/common space. There is a small park on Ephesus Church Road and public tennis courts and a ball field (that maybe part of American Legion land but used for ball games) within the area between Ephesus Church Rd. and Fordham Blvd.
    As a resident for 12 years in this particular area – though I’ve traversed most of Chapel Hill several times campaigning – I know what Chapel Hill needs most is retail and office-based businesses.
    Too many, including a man who had a Letter to the Editor in this past week’s (March 2012) Chapel Hill News, have a knee-jerk reaction to any development that is not full of green/park space. Small pockets of shade trees with a few ergonomic benches are all the additional “green space” that most of Chapel Hill needs, and a few of such spaces are already included in the Eastside Small Area Plan.
    This is probably a good place and time to remind Chapel Hill residents that in the 2009 Town election our current mayor won by approx. 67 votes, and that happened after several dirty maneuvers were used by the “Old Guard” usual characters. In other words, about half of Chapel Hill’s voters wanted a Harvard MBA to be mayor, while the other half voted for the Sierra Club/Independent Weekly customarily endorsed candidates. Mayor Mark Kleinschmidt has demonstrated an awareness of the newer interests of Chapel Hill residents, and therefore I endorsed his re-election in 2011.
    In addition, those who have demanded more and more public transit (which we residents of Chapel Hill & Carrboro plus UNC pay for) have traditionally opposed dense developments. More height, at least to four floors, in more spaces are necessary to bring in the resources and riders to support more buses, more frequent buses, more night runs, and perhaps eventually light rail or rapid transit buses.
    Our long overdue new Comprehensive Plan must deal with the marketability realities of life along with the needs of an aging population as well as an increasing population: a variety of goods and services available around town (also increasing local jobs), more apartment dwellings, and homes priced for salaried working people.

  2. Scott Radway says:

    Echoing Julie McClintock – Can you provide links to the presentation of Dwight Bassett and all the presentations given by David Bonk. And if Mitch Silver’s presentation on demographics is available also the link to it. And please send this information in an email blast so that those on the list will be informed.

  3. Pingback: February 15: Future Focus |

  4. Jeanne Brown says:

    I really appreciated the presentations by Dwight Bassett and David Bonk.
    Here are some of the questions that I would like answered based on the information presented.
    “Chapel Hill is close to being built out”
    What percent of Chapel Hill is currently built out?
    What other areas has the town identified as most promising for re-development?
    Do residents feel that re-development should be explored instead of new development in the rural buffer and on environmentally sensitive properties? (how do we ensure balance?)

    “We need to maximize future opportunities for revenue”
    During the presentation, economic data was presented regarding the financial cost to the town of various types of development. How do we address the non-economic “costs” of growth and what are the constraints to growth? (water supply, water treatment, sewage, schools, waste, traffic…..)

    Chapel Hill tax base: 16%
    What percentage of the town is occupied by University property? How much of that is off the tax rolls? Of those properties on the rolls, do they pull full taxes or a portion? Have the town and University talked about strategies whereby the town can benefit from University growth? (Based on the slides that address tax yield of developments, the recent property purchased from BCBS, if developed as a mid-rise, multi-use property” would have generated $414,000 x 47 acres – roughly $1,945,000.)
    What percentage is occupied by other non-tax-paying entities (schools, churches….)

    Retail development and grocery stores
    During the presentation, it was mentioned that stores like A Southern Season, Trader Joe’s, Fresh Market and Whole Foods draw people from neighboring communities. Can the town capitalize on that interest to bring visitors during “off peak” times? (What kind of festival can we hold that is aimed at the crowd that treks here to take cooking classes or buy gourmet foods at a Southern Season? (A wine festival? ….. other events? Other things that can draw visitors to Chapel Hill?)

    Ephesus Church Road and Downtown development
    This discussion introduced a number of topics to be discussed further:
    1. Re-development opportunities: What other areas of town has the town identified as promising “re-development” areas?
    2. “Cross street” anchoring: Are there other areas of town that would benefit from “cross street” anchoring? Are there other types of “anchoring” that might be used? For instance, looking at popular destinations such as the library, the YMCA, Park & Ride lots…..
    3. The Ephesus Church proposal seems to have addressed economic and walkability issues (?)) but what about “livability/healthy living”? Where is the place that people can garden or play ball? The conceptual design doesn’t indicate real green space

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