The private not-for-profit that manages Research Triangle Park has taken control of nearly 100 acres off Interstate 40, where it plans to introduce the first major residential and retail developments in the park’s 55-year history.
The deal is the most tangible step yet in the park’s effort to transform itself from a series of sprawling corporate campuses into a place where people can live, work and socialize. The project could also finally give RTP an inviting entrance point for visitors that showcases the research and technology taking place within its 7,000 acres.
“You’re kind of at Main and Main as far as the Triangle is concerned,” said Smedes York, a developer who is on the board of the Research Triangle Foundation, which manages the park. “ This is a key site, and we believe that it will be very successful in terms of what the vision is” for the park.
The land will be the first section to be redeveloped according to RTP’s updated master plan, which was unveiled in November 2012. That plan lays out a vision of a more densely developed park featuring the amenities that high tech workers have increasingly come to expect.
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The foundation paid $17 million for three properties within the park that make up the 100-acre site. The foundation already owned the underlying land. But it didn’t own the buildings, which all had long-term ground leases attached to them.
Those buildings include the home of the Research Triangle High School, the old Governor’s Inn Hotel and Park Center, a nearly vacant 70-acre office park at N.C. 54 and Davis Drive.
Bob Geolas, the foundation’s president and CEO, said the not-for-profit will take the next four to six months to develop a site plan for the project, which is being called Park Center.
The foundation will identify a new location for the high school within the development, as well as space for offices, cafes, restaurants, retail shops and apartments.
“Park Center will be designed so that we can appeal to that broad range of technology companies,” Geolas said.
He added that it would seek to embody “the convergence between science, technology, art and the humanities, which has never really been done here in the park. We think if we create a place that’s constantly being reimagined and redeveloped, that it will continue to evolve into a variety of technology companies.”
Delivering on those lofty goals will require the foundation to work in a role – developer – that it has not had in the past. Although the foundation has hired the Houston-based developer Hines to assist it, the acquisition of Park Center allows the not-for-profit to be both an investor and lead developer on the project.
The foundation took out a $20 million line of credit to acquire the properties, something it hadn’t done in its history.
“This is a new step for us,” said Geolas, who previously led N.C. State University’s Centennial Campus and Clemson’s International Center for Automotive Research.
Competition for workers
The park has come under increasing pressure to evolve as the tastes of young, highly skilled workers have changed. RTP’s near total lack of amenities for its workers now stands in sharp contrast to the thriving business districts in downtown Durham, downtown Raleigh and North Hills.
“The bottom line is they need to bring residential and retail to be able to compete with the other parts of the Triangle market that have flourished,” said Rich Harris, managing director at Synergy Commercial Advisors in Durham. “ In the last 10 years, it’s become much more of a priority for a larger group of office users to have those types of amenities.”
Harris said Park Center should go a long way toward making the park more competitive. But he cautioned that the process won’t happen overnight.
“It’s going to take some time. But I think what the park has going for it is that there are more canvases there that are blank than there are in other areas of the Triangle,” Harris said.
When RTP unveiled its new master plan, the foundation indicated that the first area to be redeveloped would likely be a 300-acre area at the northern, Durham County end of the park that was to be called Triangle Commons.
The foundation still expects to acquire and redevelop that land at the intersection of Davis Drive and Cornwallis Road, much of which is owned by IBM and the U.S. Forestry Service. Geolas said the ultimate goal is to link Triangle Commons and Park Center, each of which is near a proposed Triangle Transit commuter rail station.
“Now we have an opportunity to put together an amazing innovation corridor,” he said. “Four hundred and nine acres, almost half the size of (New York’s) Central Park.”
Redeveloping Park Center, which already has water and sewer service, means the foundation can move forward with construction at least a year sooner than it would have been able to on the Triangle Commons site.
Park Center could eventually contain between 2.5 million and 3 million square feet of new development. Geolas said private investment in the center could top $2.5 billion. RTP is now home to about 39,000 full-time employees and more than 22.5 million square feet.
The Park Center deal came together quickly. The office park’s previous owner, the pension trust GE Asset Management, had initially rebuffed the foundation’s offer for the property. GE, which paid about $65 million for the property in 2002, held an auction last year, but few buyers expressed interest.
Geolas said just after Christmas he got a call from GE’s representatives saying they had decided to accept the foundation’s offer of $6.2 million.