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Published: The News & Observer, February 10, 2003
Author:
Steve Cannon;
Staff Writer
Edition: Final
Section: Business
Page: B8
Taking the long view
RALEIGH -- Greg Hatem built his real-estate company buying and
renovating buildings in downtown Raleigh that other developers passed
over.
With such projects as a former Coca-Cola warehouse that he turned
into one of downtown's first nightclubs and a meat-packing plant
he converted to a wine bar and office space for tech companies,
Hatem has become one of downtown's biggest developers, one building
at a time.
Now Hatem is about to start his most ambitious development -- renovating
50,000 square feet of historic buildings on Wilmington and Hargett
streets for offices, stores and apartments.
" The easy projects in downtown Raleigh are pretty much done,"
said Hatem, whose company, Empire Properties, got started in 1996
with the renovation of a warehouse on West Street for Jillian's
Billiards Cafe. "This is a lot more challenging."
The latest project covers four buildings that formerly housed the
Heilig-Levine furniture store and the Upstairs restaurant. It includes
an inner courtyard that Hatem wants to turn into a feature that
attracts shoppers and restaurant customers.
Because the corner structure was built in 1870 as a hotel, and
the three adjacent buildings opened in 1910 and 1930, Empire will
be trying to win federal and state historic renovation tax credits
for the project. Including $1.46 million he paid for the buildings
in May, Hatem said renovation will cost about $5 million.
When he began his sweep through downtown seven years ago, not
many developers were interested in the vacant store fronts and warehouses
that Hatem envisioned as future homes and restaurants. These days
he has a lot more company in a market of slumping demand.
On the west side of downtown, construction of two condominium
projects has been postponed for two years as developers struggle
to sign up buyers. On Fayetteville Street Mall, a Boston developer
backed out of plans to renovate the former Belk department store
for condos and stores, although Raleigh developer Vaughn King said
last month he wants to buy the building and finish the project.
Restaurant space on Fayetteville Street has had trouble attracting
tenants while the city decides whether to tear up the pedestrian
mall for vehicle traffic. Vacancy rates for downtown retail space
are estimated between 5 percent and 6 percent -- slightly above
the Triangle average, but real-estate professionals say the slow
economy has made recruiting new restaurants and stores difficult.
" There's not a lot of demand right now," said Terry
Mikels, president of Mikels & Jones Properties, which is leasing
space at the Boylan-Pearce building and Briggs Hardware building
on Fayetteville Street Mall. "It could be a good speculative
market for developers, because whoever guesses right might find
a lot of demand in a short time."
Developers are counting on a boost from downtown's biggest redevelopment:
Progress Energy's plans for two office towers with 400,000 square
feet of office space and some retail and apartment space on Wilmington
Street. The utility has has accelerated its plans for the office
space and says it wants to start building this year.
Hatem's project already has one guaranteed tenant: the barber
shop on Hargett Street that has been in the building for decades.
But he says there are several potential renters for the office space
and retail space that would sign leases when he finishes initial
construction at the end of the year.
Hatem said tenants have sought him out after seeing his previous
projects, including Jillian's, the offices and wine bar on Martin
and Harrington streets called Commerce Place and the recently opened
Duck and Dumpling restaurant on Moore Square.
Patience served Hatem well on the early projects. The warehouses
that are now Jillian's and Commerce Place sat for more than a year
before finding tenants. A warehouse at 520 West Lane Street, off
Glenwood Avenue, sat empty for two years before the owners of health
club Capital Fitness bought the building in August.
Hatem has more projects waiting after the Heilig-Levine building,
including buildings at 8-10 Hargett and 12-14 Hargett and several
acres of land he owns in downtown.
" We're not going to know for 10 years whether these were
the right moves," Hatem said. "By then, we'll know what's
fallen off and what projects were for real."
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Growing empire
Since converting an old warehouse into Jillian's Billards Cafe,
Greg Hatem has pumped new life into properties across downtown Raleigh.
1. Heilig-Levine building: 50,000 square feet of offices, stores
and apartments; opens early 2004.
2. The Duck and Dumpling/The Pour House: 5,100 square feet for restaurant,
bar; recently completed.
3. Alexander Building: 35,000 square feet off offices; purchased
in 2001.
4. Commerce Place: 40,000 square feet of offices, wine bar; opened
2000.
5. Jillian's: 11,000-square-foot bar; opened 1996.
6. 8-10, 12-14 E. Hargett: 8,000 square feet of offices; under renovation.
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