After a months long search to find a buyer, William Peace University has closed on a $34 million deal to sell Seaboard Station in downtown Raleigh, North Carolina, according to those who worked on the deal. The transaction is bringing in a substantial return for the university and clears the way for the new owner to launch a $250 million redevelopment project at the aging retail center.
PN Hoffman, a mixed-use developer active throughout Greater Washington, is acquiring the roughly 7 acres and cluster of low-slung shops at the north end of downtown Raleigh that makeup Seaboard Station and has a multi-phase plan to grow the size of the shopping center from less than 100,000 square feet to 800,000 square feet, according to company officials.
The redevelopment plans could bring approximately 650 apartments, 150 hotel rooms and 90,000 square feet of new retail space. The project involves demolishing some existing retail buildings while keeping others, PN Hoffman CEO Monty Hoffman says.
The company has developed high-end mixed-use and residential buildings throughout Washington, D.C., including a $2.5 billion waterfront development south of the National Mall known as the Wharf, but has never expanded outside the the city’s metro area. Seaboard Station will be the company’s first. Hoffman says the company has been looking to break into the Triangle and market and was drawn to the site because of its perch on the northern edge of downtown.
“The location is superb,” Hoffman says. “We love the composition of uses that we can put on here. We’re really a neighborhood transformation-type developer. This will allow us to build a community and connect into other communities.”
With the property acquisition now complete, the company plans to open a North Carolina office in the Triangle region, its first outside of the D.C. metro area. Raleigh investor John Florian, of the Florian Companies, is joining PN Hoffman to help run the new office.
The firm will have to seek a rezoning approval from the city for the project. Hoffman says the company is aiming to break ground in 20 months. The first phase of construction would take two years, while the final two phases would last three years.
The company’s bid for Seaboard Station was picked from 13 offers. William Peace put the property on the market in March and decided on PN Hoffman because of the company’s “expansive redevelopment proposal, centered around new density and mixed-uses,” according to a statement from the university.
When the property was initially listed, William Peace President Brian Ralph wrote in a letter to alumni that selling the land would allow the school to put the proceeds into its endowment and invest in new facilities and programs.
The university purchased the property for $20.75 million in 2013, when the prior owners, Gregory & Parker Inc. and a related company, where going through Chapter 11 bankruptcy reorganization.
At the time, the property acquisition was viewed as risky for William Peace, which has struggled financially over the years. The school bought the site using $10.75 million from its endowment, representing a quarter of its funds.
But the bet that the center’s value would rise with the growth of downtown Raleigh has paid off. “The significant value increase is a clear indication of the robust urban market in downtown Raleigh,” TradeMark Properties Founder Billie Redmond said in a statement. TradeMark Properties worked with the university to sell the property and will maintain its role managing and leasing the center for PN Hoffman.
Before the property was put on the market, William Peace had been working on a master plan for the shopping center and received a commitment from Harris Teeter in 2016 to open a store at the site. But in the months that followed, Publix confirmed its plans to open at the nearby Peace development being built by Kane Realty Corp. less than a half-mile from Seaboard Station. That project is expected to open in the summer of 2020.
Hoffman says the company likely won’t consider including a Harris Teeter but is interested in a smaller format grocer in the 25,000-square-foot range. “I love Harris Teeter,” he says. “It’s a great model but in this particularly case we don’t feel that a full sized Harris Teeter is appropriate. We feel it would be just a little too big.”
While the company will have its hands full overseeing the redevelopment of Seaboard Station, it isn’t limiting itself in the Triangle. “This is the beginning of more,” Hoffman says. The firm is relocating employees here and hiring locally.