University Square plans lack money

As UNC mulls redevelopment plans for University Square, the property could see a flurry of development by 2014 — or none at all.

Now that the University finds itself involved with a mixed-use development in Chapel Hill on top of its expansive vision at the satellite Carolina North campus, it will be hard pressed to find the funds to fully complete its ambitious development agenda.

“We’re delighted to be in this kind of position for development,” said Tony Waldrop, vice chancellor for research and economic development. “But do we have the money to start building? Absolutely not.”

In early September the architectural firm of Elkus Manfredi will redesign the University Square property on West Franklin Street, which the UNC-Chapel Hill Foundation, Inc., purchased in June 2008.

Tentative plans for the property, which developers are calling 123 Franklin, include a redesigned shopping plaza with a parking garage and a mix of shopping, office and housing, emphasizing the link the development fosters between downtown Chapel Hill and the campus.

“It’s very attractive to be located in downtown Chapel Hill,” said Gordon Merklein, executive director of real estate development. “The limited supply of available space located close to the University makes this kind of property valuable.”

Construction projects and real estate sales across the Triangle continue to stall.

And despite the attractive nature of the University Square property, redevelopment hinges on obtaining credit — and the guarantee that consumer demand will be there when the project takes off.

Unlike the Carolina North project, which will be an extension of the main UNC campus, University Square is owned by a private entity.

That means that while some of the buildings at Carolina North can depend on appropriations from the N.C. General Assembly, University Square’s completion depends on the developer’s ability to obtain credit, attract and retain business owners and complete projects.

In June, the University’s Board of Trustees finalized a development agreement with the town for the Carolina North property, a proposed satellite research campus two and a half miles from the main campus.

“We want to be prepared to get moving when funds become available,” said Jack Evans, executive director of Carolina North.

But it might be a while before those funds can be used. While the Carolina North property will be funded by a variety of public and private sources, all of those sources have been put on hold due to the economy, Evans said.

The same thing could happen at University Square.

“In the best case scenario, everything would get built out and fully leased, according to the development plan,” Merklein said.

That plan is still on the drawing board, making final cost estimates for the project pure conjecture, Merklein said in an e-mail.

But if the economic climate continues to worsen or the developer falters in its construction and redevelopment, the University will continue to operate University Square as is.

University officials familiar with the project are hopeful that development will be quick and successful.

“The University and the town are a magnet to bring business in,” said Dick Mann, vice chancellor for finance and administration. “And University Square is meant to be a mixed-use development for the future of downtown.

“I would think that the town is very interested in development here.”



Contact the City Editor at citydesk@unc.edu.