Why hasn’t Downtown South broken ground yet? Here’s the answer.
In 2020, developer Kane Realty and N.C. Courage owner Steve Malik got the critical rezoning approval for a $2.2 billion sports and entertainment district in downtown Raleigh’s southern edge.
It’s one of the city’s largest proposed projects yet.
But three years later, Downtown South still hasn’t broken ground. This week, reports began to circulate that the project, located around 1721 S. Saunders Street, could be “on pause.”
Here’s what we know.
Is Downtown South “on pause”?
No, Downtown South is not on pause, Bonner Gaylord, Kane’s chief operating officer, told The N&O.
“Everything’s going ahead. It’s just the financing process is taking longer than in years past.”
Rising office vacancy rates and a tightening lending market is making it harder to close deals, he said.
All projects are facing those headwinds, he said, but he remains positive, given the project’s location near attractions like the 308-acre Dorothea Dix Park.
“We’re continuing to move forward and work for favorable financing terms. Overall, we’re still generally on track.”
What is the update on Downtown South?
Developers have secured permitting for the project’s first-phase seven-story residential building, Gaylord said. It will bring 280 units and 12,500 square feet of retail.
They also expect to get approval for a 3,500-person music venue in “early 2024.”
Other buildings include a 21-story apartment tower and a 27-story office building.
- The 375-unit apartment building, designed by Raleigh-based Cline Design Associates with Kane, will have a coworking space, a roof-top club room and a pool deck. Seven levels of parking and 14,000 square feet of ground-floor retail and creative office space are also in the design.
- The office tower is the work of international architecture firm CallisonRTKL. It will be about 375,000 square feet, including 10,000 square feet of ground-level retail and a parking deck.
According to the developers’ fourth-quarter update, the project’s first phase will bring 1,000 housing units, 60,000 square feet of retail, 535,000 square feet of office space, and a 180-room hotel.
It will be built in “scaled phases.”
When could Downtown South break ground?
The project is targeting a mid-2024 construction start. “We’re working towards that and feel like we can get there,” Gaylord said.
What’s happening at the site now?
Two existing warehouse buildings on the site are being reused.
Roughly 31,000 square feet of office space is fully leased, he said. Another 14,000 square feet of retail is being leased with a focus on attracting “hyper-local retailers,” he said.
Does Downtown South still include plans for a stadium?
Yes, that’s still part of the long-term plan, Gaylord said.
Developers initially pitched a 20,000-seat open-air stadium as an anchor to the district and possibly the future home of the North Carolina Courage and North Carolina FC. Malik owns both.
But there’s still no clear pathway to pay for it, The N&O previously reported.
In October 2020, Kane Realty asked the city to consider issuing a tax increment grant, or TIG, to finance the stadium. The developers would repay the TIG using tax revenue the stadium generates in the future.
Tax increment grants have been used in Charlotte, but not previously in Raleigh.
Discussions are continuing with the city, Gaylord said.
Has the estimated $2.2 billion price tag for the project changed?
Too soon to tell.
Gaylord said the construction market has seen some “softening” in recent months.
“Prices are coming down” from pandemic highs, he said. “Hopefully there will be some softening here, too.”
Why is this project so pivotal to the region?
The development, along with 12 other projects slated near Dix Park, promise to transform Saunders Street, Interstate 40 and South Wilmington Street into the city’s new southern gateway.
That surge could bring over 5,200 new residential units to this area, The News & Observer has reported.
It’s also sparked fears of gentrification and displacement, pushing the city to adopt a plan to promote affordable housing for longtime residents.
This story was originally published December 7, 2023 at 5:30 AM with the headline "Why hasn’t Downtown South broken ground yet? Here’s the answer.."
