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Old Buildings, New City

Old Buildings, New City

The News & Observer
November 24, 2003

Author: Dudley Price; Staff Writer
Edition: FinalSection: Business

Old Buildings, New City

DURHAM -- The two old brick buildings on downtown East Chapel Hill Street were gutted months ago, and only empty holes are left where windows were ripped out.

But it's here that Greg Hatem sees the beginnings of apartments, condos and offices. Hatem, who gained a reputation as one of the most successful renovators of old buildings in downtown Raleigh, is betting he can be successful in Durham, too.

"I don't really think I'm sticking my neck out," Hatem said. "They're sleeper buildings, and they are in great locations," he said, referring to sites within walking distance of Durham's civic center, Marriott hotel, YMCA, the Carolina Theatre and downtown offices.

"The fact that there is a need for housing, the fact that downtown Durham is turning around now, and the fact that the buildings can be renovated pretty economically makes sense," said Hatem, who estimated the project will cost between $3 million and $4 million.
Hatem and his partner, Durham architect John Warasila, have contracted to buy the two old buildings plus an 89-year-old store selling discount furniture on East Chapel Hill Street a few storefronts away. They plan to turn the buildings, which have a total of 50,000 square feet, into housing and offices for people they expect will be attracted to downtown Durham when the American Tobacco renovation opens next spring.

Decades ago, the area around the downtown loop framed by Morgan and Ramseur streets was Durham's retail center. But many stores closed or moved away.

Now the area is occupied largely by city and county offices. In recent years, a handful of developers have snapped up mostly smaller buildings inside the loop, renovating them into offices or residential units. But many of the renovations were for their own use, and there still are a number of empty storefronts.

Hatem's first foray outside the Raleigh market shows that downtown Durham is attracting new interest from developers.
Beginning in 1996, Hatem built a small empire by renovating old downtown Raleigh buildings passed over by other developers. Starting with a former warehouse on West Street in 1996 that became Jillian's Billiards Cafe, Hatem and his partners have acquired 200,000 square feet of space, making his company, Empire Properties, one of downtown Raleigh's largest private landlords.

Hatem said he had been interested in downtown Durham for several years but didn't decide to make an entry until he met Warasila.
Warasila is chairman of Downtown Durham Inc., a downtown booster group. Two years ago, Warasila and a partner bought an abandoned 12,000-square foot store at 204 Riggsbee Ave. for $130,000. After a $300,000 renovation, Warasila moved his architecture firm, Alliance Architecture, into the ground floor and converted the top floor of the two-story building into two condominiums. Warasila learned how much demand there was for residential units when, over two months, he received 130 calls from potential buyers.

This year, Warasila and his partner, Raleigh real estate broker Jim Scofield, paid $100,000 for an adjacent 24,000-square-foot building that they plan to turn into 10 condos. And when the three East Chapel Hill Street buildings came on the market, Warasila called Hatem.

"I told Greg this is a home run," Warasila said. The partners expect to close on the buildings in February and complete construction in a year.

The largest building, with 25,000 square feet, at 309 East Chapel Hill St., will be converted to 16 residential units on the top three floors with retail on the ground floor. The two other buildings, at 320 and 322 East Chapel Hill St. with a total of 25,000 square feet, could be a mixture of retail, offices and residential, Hatem said.

Because the buildings date to the early 1900s, the partners will qualify for state and federal tax credits that could be worth up to $500,000, Hatem said.

Although redevelopment in the loop has been slow, Hatem expects it will pick up. About 1,200 more downtown workers are expected in downtown when the first phase of the enormous American Tobacco renovation -- about 550,000 square feet of offices -- opens just south of the loop near the Durham Bulls ballpark next spring.

Buildings being renovated by the Self-Help Credit Union should add an additional 300 downtown workers by the same time.
"As they start filling up office space in these big projects like American Tobacco, some people will start moving to Durham, and some will want this living environment," Hatem said.

"A lot of the bigger projects are happening in Durham," Hatem said. "It's the reverse of what's happening in Raleigh. Raleigh started with smaller projects and now is starting to get Progress Energy and a new civic center.

"Durham is the opposite: they've got American Tobacco, the ballpark, and Blue Devil Ventures apartments," Hatem said, referring to the 8-year-old Durham Bulls Athletic Park and 234 new apartments built in two 100-year-old tobacco warehouses on the downtown fringe.

"It just means a lot of bigger projects are complete or in the works," Hatem said. "We'll just be filling the backside."

Copyright 2003 by The News & Observer Pub. Co.

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