Published: The News & Observer, November 24, 2003
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
"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
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
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
"It just means a lot of bigger projects are complete or in
the works," Hatem said. "We'll just be filling the backside."