|By Jack Hagel, The News & Observer,
Raleigh, N.C.McClatchy-Tribune Regional News
Jul. 23, 2009--An ambitious plan to build seven stories of shops and hotel rooms is quietly unfolding in downtown Raleigh's popular Glenwood South district.
A group called Glenwood South Hospitality is asking for special zoning permission that, if granted, would help it build a 157-room Hampton Inn above street-level shops at the northwest corner of Glenwood Avenue and Johnson Street.
The group, made up of investors from Greenville, N.C., and Greenville, S.C., has been sharing plans with neighbors and civic boosters in recent months.
The group would be the latest to vie for business from visitors to Raleigh's reviving downtown. And it would be the first to do it on Glenwood proper. The project would stand across from 510 Glenwood, the building that houses restaurants such as Bogart's and Hi5.
The question: Will it have the mojo to get out of the ground before the others?
Developers have spent the past four years scouring sites for hotels in the city's bustling entertainment strip, which stretches from Hillsborough to Peace streets. And in recent years, they have crowded on Glenwood South's fringes.
In early 2008, a group of Raleigh developers revealed plans to build the 10-story Powerhouse Plaza, which would include ground-floor shops and restaurants, parking and offices, topped with a 134-room Hyatt Place hotel and rooftop bar.
In early 2007, Winston Hospitality revealed plans to build 200 rooms on Hillsborough Street, two blocks south of the proposed Powerhouse Plaza.
Neither project has come out of the ground, and there's no telling when or if they will. Plans have been iced by lenders, who have tightened up as leisure and business travel have declined.
Developers were planning about 850 rooms downtown this time last year. But plans for at least 500 of them have since been delayed or canceled due to lending restrictions.
It was unclear Wednesday whether Glenwood South Hospitality had financing in hand, or when they hope to begin building.
Partners in the group did not immediately return messages seeking comment. Regardless, they have hurdles aplenty to clear before they can drop shovel. In addition to the zoning approval, the group needs to submit a site plan, which would also have to be approved by city officials.
City boosters are watching closely, with crossed fingers. The credit crunch has put a damper on plans to lure bigger conventions. As it stands, a busy day at the convention center could force visitors to find accommodations as far as Crabtree Valley Mall.
"A Glenwood location would probably do well, due to all the activity, shopping, dining, nightlife that's there," said Loren Gold, executive vice president at the Greater Raleigh Convention and Visitors Bureau. "They'd probably play real well off the leisure segment and at times ... as an overflow for larger groups" at the convention center.
Landlords appear to have dodged a bullet on Jones Street.
State legislators, who are looking to every crevice of the economy for ways to bridge a yawning budget gap, strongly considered taxing limited liability companies. But they appear to have backed down from the plan, for now, after intense lobbying from the real estate industry.
Most of state's investment property is held by LLCs, which pay property taxes, but pass profits to individual shareholders, who pay income taxes on their shares. Taxing LLCs, investors said, would amount to double taxation.
One proposal was expected to have garnered at least $190 million over the next two fiscal years.
Investors and lobbyists representing members of the National Association of Industrial and Office Properties and the International Council of Shopping Centers apparently got their message across. They argued that additional tax -- especially at a time when demand for all kinds of commercial real estate is lagging -- would sap profits from investors, or send those who are breaking even into the red. They also worried that the added business costs would make it hard for the state to recruit and retain jobs.
Staff writers David Bracken and Benjamin Niolet contributed to this column.
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