American Tobacco turns 10
After her first tour of downtown Durham’s American Tobacco Campus, Joni Madison threw her shoes away.
That was before the renovation of the former cigarette factory into a lively complex of offices and shops.
That also was before the advertising agency McKinney – where Madison holds the title of partner and chief operating officer -- moved its headquarters to the campus from downtown Raleigh.
At that time, there were trees growing out of the roof, Madison said, and part of the roof was caved in. There was also lime on the floor to keep the odor down from pigeon droppings, she said, in the part of the building that McKinney would eventually occupy.
“[After my] first experience, I threw my shoes away,” she said. “I think it was divine intervention that people who rely heavily on their imaginations saw this building, and saw a phenomenal opportunity for our company.”
McKinney was one of four anchor tenants that made early commitments to move into the American Tobacco Campus, which is marking a decade since it opened in 2004. On June 24, 2004, employees of the pharmaceutical company GlaxoSmithKline became the first to move in.
Early commitments from McKinney, GlaxoSmithKline, Compuware and Duke University to lease space in the campus before it was completed helped make the project happen, said Michael Goodmon, vice president of real estate for Capitol Broadcasting, the Raleigh-based developer and the owner of the property.
“They understood from the beginning how important their assistance and their help were on this partnership, and every one of those companies has been key to our success,” Goodmon said.
Before Capitol Broadcasting began the redevelopment work in 2003, the campus had been vacant since 1987. American Tobacco Co. moved out after making cigarettes at the complex for a century.
Capitol Broadcasting’s renovation plan got off the ground in 2003 after the Durham City Council and County Commissioners put the final stamp of approval on $43.5 million in public subsidies to support the project. The city’s pledge for the first phase included cash payments and money for the construction of a parking deck, while the county’s pledge was mainly to finance a second parking deck. Earlier this month, city officials released figures that showed that by the end of fiscal year 2016-17, the city alone will have paid $30.1 million for its involvement in American Tobacco, counting the city’s incentive and obligations for the North Deck.
Bill Kalkhof, the former president of the downtown-focused economic development organization Downtown Durham Inc., cited those public incentives as well as the commitments from the anchor tenants as key to the project. The incentives weren’t popular with everyone, Kalkhof said.
And Mike Hill, the former general counsel and vice president at Capitol Broadcasting, said it took a leap of faith from the anchor tenants. Hill said Capitol bought the campus from another prospective developer, and at least one other company previously got an option to try to develop it that didn’t move forward.
“It required some people ... to take a leap of faith, particularly since we had never done a real estate project before of this magnitude,” he said.
Bob Ingram, the former CEO of Glaxo Wellcome who co-led the company’s merger to form the pharmaceutical company GlaxoSmithKline, said he remembers employees asking him if he thought the location would be a good work environment.
He said company executives saw American Tobacco as a location for off-site employees that would help meet the need for space, and also that would give a good start for the project.
“You have to think back when it started, it wasn’t nearly as vibrant an area as it now has become,” he said. “I remember some employees asking me if I really thought this was something that would be good for them in terms of a work environment and I assured them that I had looked at the space. And I couldn’t have ever predicted just how successful it was.”
Behind GlaxoSmithKline, the second company to move to the campus was Bronto Software, a start-up tech company that had 10 people on-staff at that time. The email marketing software company was started by CEO Joe Colopy in his home, and it moved to American Tobacco after shorter stints in two other office locations.
Colopy said he liked downtown Durham with its historic buildings with exposed brick and hardwood floors. There weren’t many technology companies in downtown. But he said they felt like the move aligned with the company’s personality as an innovative, interesting company.
In early July, Bronto moved into 1,500 square feet of space at the campus. Company employees camped out in their office space with tents and sleeping bags the night before the move. After a move to a larger space and absorbing nearby offices, the company now employs close to 200 people in Durham, Colopy said, and occupies about 40,000 square feet at the campus.
Now American Tobacco is a meeting place for technology leaders. In addition to Bronto, the campus is home to the original location of the American Underground, a hub for technology entrepreneurs. Re-dubbed American Underground@American Tobacco after the launch of a second location downtown on Main Street, the Underground started in a basement of the campus as a place where technology start-ups and entrepreneurs could call home.
Adam Klein, the chief strategist for the American Underground, said in an email that the original location now houses 35 companies, and the second location has 90.
“The technology sector, the entrepreneurship sector, in downtown Durham has exploded, and we do see a lot of companies like that,” Goodmon said, as well as law firms, banks, architecture firms, and others. He said diversity is important to the campus’s success.
The eventual departure of GlaxoSmithKline, and of other companies, is part of the life cycle of the project, he said. Glaxo moved 400 employees out of American Tobacco as part of a plan to shrink its footprint across the Triangle.
“Once they saw (we) got our legs underneath us, they felt like it was time to move on,” Goodmon said.
The campus has new challenges, Goodmon said, such as balancing the popularity of the its entertainment – restaurant and other attractions – with the needs of office tenants.
“People enjoy being a part of American Tobacco,” Goodmon said. “With that comes operational issues that we work through.”
The popularity of its restaurants is something that Tyler Huntington, co-owner of the Tyler’s Restaurant & Taproom local chain of restaurants and bars, said he experienced from the start at the location. The Durham restaurant, which opened in 2005, was the second location for Tyler’s (the first was in Carrboro).
Huntington said a neighbor heard about the American Tobacco project, and dropped off information for him while he was mowing his lawn. He said he expected to have a good lunch business, but not a lot of dinner business. But from day one, the restaurant was packed. “It was totally unexpected,” he said, and they’ve seen increases each year.
Huntington said he believes that the new restaurants that are planned to open in the city’s downtown and at the new Diamond View III building across the street from the campus are needed to meet demand.
JOIN THE PARTY
There are events planned later in the year to celebrate American Tobacco’s 10th anniversary. There will be a private tenant appreciation party in September followed by a barbecue lunch for former American Tobacco factory workers and people involved in the campus’ renovation that same month.
A public festival will be held on Blackwell Street from 1 to 5 p.m. on Sept. 7. The street party is meant bridge the original campus to the Durham Performing Arts Center, Durham Bulls Athletic Park, the coming Aloft Hotel and Diamond View III with its new restaurants. The festival will also feature tours of campus sites not always available to visitors.