The Old Police HQ Redevelopment

Original Post: http://www.buildingbullcity.com/2020/01/the-old-police-hq-redevelopment.html

Thanks for the update on the old Police HQ. However I confess to being a bit skeptical about the need for more street-level retail and office space as there seems to be a surplus of such space already. I'm referring to the unused space in the new parking deck at W. Morgan & Rigsbee, in the Durham County Administration II Building (i.e. the Old Courthouse) at Main & Roxboro, and in the Durham ID buildings at Morris & Hunt. There is probably more but this is just what I saw this morning on a quick walk around downtown.

I do share this concern regarding retail. There are a number of forces including the fact that retail is a really difficult product across the country right now. The story goes that downtown retail was replaced by malls and big box stores. Those were replaced by Amazon. And even as more people are interested in living in downtown Durham, it's unclear how retail will shake out and if downtown retail, even "experiential" retail like coffee shops will thrive.

The other side is that Durham still has a long way to go in terms of building up a dense core to support downtown retail. Durham.ID is still very new and I would wager that a limited amount of retail will do very well there once the office space is filled and some of the new residential space comes online.

So for this project, I think some retail makes sense. Again, not an overwhelming amount of retail, but some. With residential and some office space as well as the nearby office space (NC Mutual Building and others), AND if the public space is sufficiently compelling, I think some retail may work out there.

With the other vacant retail that you mentioned, the parking deck and the Durham County building are both owned by the public sector, that frankly, is not in the business of being retail landlords normally. The county building spaces are particularly bad as they are so far off the street. But even so, I don't mean to poke holes in your argument, because I think it is a really valid concern.

That said, I think office space is different. There is low office vacancy in downtown Durham currently and that doesn't even include latent demand for companies that might be interested in locating in Durham if the right type of office space or development opportunity existed.

Plus this project is months away from a final agreement even being signed and years away from being completed. You have to plan for increased demand for retail down the line. As Dave mentioned, the downtown core is really just starting to develop. There are tons of significant residential projects that are just being completed or are soon to be kicked off. Major commercial developments that haven’t even been announced yet. I expect that in 3 years the downtown area will be much more active with jobs and residents which will absolutely drive increased demand for retail in the downtown core.

Also I was speaking with someone recently that made the point that we need to have more large footprint commercial space at least in the construction phase in order to recruit some of these larger companies or second HQ type projects (like a Policygenius). So there is necessarily some speculative aspect and forecasting to these projects.