Major Commercial Real Estate Projects Underway in Durham

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Major Commercial Real Estate Projects Underway in Durham
Trinity Capital Advisors is nearing completion on phase two of its 100-acre, 650,000-square-foot adaptive reuse development project called Park Point on the former Nortel Networks campus at Hwy. 54 and South Miami Boulevard.

By Brandee Gruener

Investment in Durham’s commercial real estate hasn’t slowed despite a year and a half of a pandemic economy. Developers are responding to continued demand for space from companies in life sciences, technology, e-commerce and distribution. Here’s a summary of some of the biggest development projects currently underway:

RTP Investment is Booming

Research Triangle Park historically was a quiet collection of secluded office buildings with workers commuting back and forth each day. Today developers are reshaping the region into a full-time community where Durhamites can live, work and play. The interest of life sciences and technology companies in RTP has driven much of the growth in commercial real estate in Durham.

The Greater Durham Chamber of Commerce reported $758 million of private investment in Durham County in 2019. In 2020, that figure more than doubled to $1.7 billion and was dominated by projects in RTP. In fact, since the start of the pandemic in March 2020, the Research Triangle Foundation has announced $4.6 billion of investment and 5,200 new jobs in RTP.

Hub RTP, part of a 100-acre redevelopment project bordered by I-40, Hwy. 54, the Durham Freeway and Davis Drive, is in the process of a massive $1.5 billion transformation being master developed by the Research Triangle Foundation. Site work on roads, utilities and a stream restoration project is about halfway complete. Durham County pitched in $20 million for site preparation and another $10 million came from RTP companies, indicating strong community support for the Hub as an amenity for the area.

Longfellow Real Estate Partners recently announced plans to build a seven-story, 220,000-square-foot office and lab building along I-40 at the Hub. A time frame for construction has not been finalized. Dallas-based KDC will build RTP’s first high-rise and is the primary developer for the remainder of up to 1 million square feet of Class A office space coming to the Hub.

Charlotte-based White Point Partners recently dubbed a 125,000-square-foot, mixed-use project it will build there Horseshoe at Hub RTP. The Horseshoe’s retail spaces and offices will encircle a plaza featuring a splash pad; it is expected to be completed in the third quarter of 2023.

Plans for Hub RTP also include 16 acres of green space, including a central park and the restored stream. The Research Triangle Foundation describes the project as having “the community and feel of a vibrant downtown with the energy of a forward-thinking science and tech park.”

Major Commercial Real Estate Projects Underway in Durham
Longfellow Real Estate Partners recently announced plans to build a seven-story, 220,000-square-foot office and lab building along I-40 at Hub RTP.

“We’re really wanting it to be … a model for what research parks will look like in the future,” said Morgan Weston, senior director of marketing and communications for the Research Triangle Foundation. Their offices recently moved to The Frontier campus, putting them “right in the middle of the action now.” While site work at the Hub continues, RTP employees can enjoy outings to Boxyard RTP, a collection of 15,000 square feet of shipping containers that house restaurants, bars and shops, which opened last spring just west of the Hub RTP property. Boxyard RTP also includes a dog park, outdoor dining and a stage for performances and fitness classes. 

Eventually the Hub will be home to 1,200 apartments, and Weston said they are in talks with a hotel as well. Providing the ability for people to walk and bike to work and then find entertainment afterward is “really transforming what it means to work here,” she said. 

While Hub RTP is an impressive undertaking, it’s certainly not the only project underway in RTP. Trinity Capital Advisors is completing an adaptive reuse development project called Park Point on the former Nortel Networks campus at Hwy. 54 and South Miami Boulevard. Work on phase two of the 100-acre, 650,000-square-foot development will be completed this year. Health care company Grail has already moved into Park Point, and Trinity Capital Advisors Partner Jeff Sheehan said more tenants are coming in 2022 (one of those will be Cree LED). He expects Park Point’s four buildings to be fully leased in the first quarter of next year, about three years ahead of schedule. Much like the Hub, Park Point includes green spaces and gathering spaces, a fitness center and on-site food service that will be provided by Clayton-based cafe operator Boulevard West.

“The activity we’re seeing is so strong because the life science demand, the lab space and other life science-related demand, actually accelerated through COVID-19,” Sheehan said. “You’re not taking your hoods and lab equipment and setting them up in a work-from-home scenario.”

Longfellow is also responding to that demand. In September, the company purchased 35 acres at the corner of Hwy. 54 and TW Alexander Drive. Longfellow is calling the project Triangle 54 and intends to build two buildings with a total of 456,000 square feet for life science tenants. The company has yet to indicate whether additional amenities such as dining or retail will be included.

“This acquisition will help us meet the strong demand in the market for lab space,” Longfellow Director of Leasing Greg Capps said in a press release. “We’re buying some of the best sites that exist in the RTP area. Triangle 54 offers great access to Highway 54, and it gives us the ability to accommodate the entire ecosystem of life science tenants, from startups looking for smaller spaces to larger companies that need upwards of 250,000 square feet.”

Meanwhile, Pasadena, California-based Alexandria Real Estate Equities recently snagged the 18 acres vacated by the Research Triangle Foundation at 12 Davis Drive, but that’s been one of its smaller purchases. Since 2020, the company has bought around 350 acres of Parmer RTP, a 20-building research and development campus located at TW Alexander and the Durham Freeway and currently home to LabCorp and Duke medical research facilities. Alexandria has announced plans to build a 100,000-square-foot manufacturing facility there for Cambridge, Mass.-based Beam Therapeutics, which is projected for completion in early 2023. Drugmaker Lilly has also bought portions of Parmer RTP, about 210 acres in total, for a manufacturing facility and other unspecified expansion plans.

Alexandria also bought the 104-acre Genesis property at East Cornwallis Road and the Durham Freeway. While spokesperson Jennifer Gilson said the company had no comment on plans for its properties, California-based DPR Construction has announced it is building a 100,000-square-foot research and development headquarters at Genesis that will be finished in December. 

While developers are rushing to build lab spaces, some are eyeing RTP for industrial projects as well. Trinity Capital purchased 48 acres on TW Alexander next to a General Electric Aviation plant, with plans to develop three buildings with a total of 441,000 square feet geared toward e-commerce, suppliers and distributors. The company announced Alexander Commerce Park as RTP’s first speculative industrial development in years. The project is expected to be completed in the second quarter of 2022. One of the buildings will be home to The Upper Deck Co., which produces trading cards and other sports memorabilia. 

Sheehan said that the shift to e-commerce and home delivery, which accelerated during the pandemic, has increased the company’s interest in investing in industrial spaces.

“In the last 36 months, we’ve gone from virtually zero to developing about 7.5 million square feet across North and South Carolina,” he said. “We have ramped up, and we intend to continue to scale.”

Industrial Projects on the Horizon

One of those developments, the 147 Exchange, is near RTP at 927 Ellis Rd. Sheehan said the 274,000-square-foot distribution building should be available for lease next September. 147 Exchange is located off the Durham Freeway near the East End Connector and close to other distributors like Amazon, UPS and FedEx.

Indianapolis-based developer Strategic Capital Partners is adding a fifth building and 200,000 square feet in Patriot Park near Miami Boulevard at 4032 Patriot Dr. The 80-acre park will have 850,000 square feet of industrial space. 

Further north, a collection of properties on Junction and Ferrell roads near I-85 and East Club Boulevard is also slated for development. In July, developer Kimley-Horn filed a site plan application for 480,000 square feet of industrial space on the properties, which are owned by Joven Group Four, Jewel C. Dehart and Leonard B. Shaffer (trustee). Kimley-Horn civil engineer Kelsey Westwood Hall said it was too early to comment on plans for the project.

Between Old Oxford and Hamlin roads, Commercial Realty Advisors plans to develop a project called Eno Venture Park on former tobacco farmland. In August, Duke Energy announced it had selected the 160-acre property for its site readiness program, which identifies high-potential sites and partners with county officials and economic development professionals to create a strategy for getting industrial sites fully ready to market. Commercial Realty also declined to comment on its plans.

Major Commercial Real Estate Projects Underway in Durham
Longfellow Real Estate Partners’ next phase of development in the Durham Innovation District begins with its seven-story C4 building at 215 Morris St. and 519 W. Morgan St.

Downtown Growth Continues 

While RTP has garnered a lot of attention lately, downtown developers continue to move forward with expansions. Longfellow recently announced plans to begin the second phase of its Durham Innovation District with its seven-story C4 building at 215 Morris St. and 519 W. Morgan St. The building is projected to include almost 200,000 square feet of office and lab space, with a possibility for some retail space as well. The company has not finalized plans yet.

Hammers and drills are busy elsewhere in two existing Durham.ID office buildings at 200 and 300 Morris St. Longfellow is in the process of converting 100,000 square feet of 300 Morris St. into lab space for life sciences companies. In its second tower at 200 Morris St., an upfit for Google’s new cloud engineering hub is underway. 

Google has been the talk of downtown since announcing it would bring as many as 1,000 new jobs to Durham.ID. The company is currently subleasing the space from Duke, but intends to find a permanent home. Unconfirmed rumors were reported by the Triangle Business Journal that Google expressed interest in the American Tobacco Campus, where it had partnered with American Underground on a Google for Startups tech hub. 

“We’re very excited about Google’s presence in downtown Durham,” said Adam Klein, director of real estate for American Tobacco, when asked if Google had inquired about space at the campus or its expansion. He did confirm that drugmaker GlaxoSmithKline is scheduled to move into the Fowler and Crowe buildings at ATC in spring 2022. GSK is relocating from RTP to downsize and move to a hybrid work schedule. Up to half of GSK employees could be working in the office at a time.

Though some in commercial real estate have speculated that downsizing office space could be a growing trend, Klein remained optimistic.

“We’re seeing companies and decision-makers really shift into gear to start making decisions about how they want to be using the office as we go into 2022,” he said. “Our pipeline of companies that are interested in being in downtown Durham is as robust as it’s ever been, and we’re not seeing any slowdown in that.

“We’ve also had some companies that want to expand and want to take more space,” Klein added. “Business has been good for some companies over the past few years, and so they’ve added a lot of new employees, many of whom have never been to the office. 

“As businesses look at 2022 and anticipate a return to the office, they know they’re going to need a bigger footprint than what they started with.”

That’s good news as the developer for ATC, Capitol Broadcasting Company, and its partners, Hines and USAA Real Estate, are preparing to start construction on a 700,000-square-foot, mixed-use project next year. Klein said the development at the old University Ford site will include one residential building and two eight-story office buildings with retail and restaurants on the first floor. Developers also hope to include an entertainment venue, a lawn similar to the one at the historic campus and a grocery store. A second development phase could add another residential building and more office space later on.

Nearby at Roxboro and Pettigrew streets, Trinity Capital is wrapping up construction of a 203,000-square-foot, eight-story high-rise called The Roxboro at Venable Center. Companies will begin to move into The Roxboro office and lab building as well as its parking deck this December. Construction on 200 luxury apartment homes encircling the parking deck will be completed in 2022. 

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