What’s next for the Wake Forest Innovation Quarter, now that the main building of the Bailey Power Plant is open and Robin Team-led Front Street Capital has committed to developing the remaining two small buildings in the block?

Leaders from Wexford Science and Technology and Wake Forest Baptist Medical Center know the general direction they want to take the 30 acres directly south of Bailey Power Plant but admit they’ll have to determine the specifics along the way.

“We have a conceptual map – but that’s all it is, conceptual,” said Will Partin, Wexford’s senior director of development and a Wake Forest University alumnus. “We’re going to move south from the Bailey Power Plant. We will see new development happening in the near future.”

“We have a couple of ideas and a couple of potential users,” agreed Graydon Pleasants, head of real estate development for Innovation Quarter. “Real estate is about the user. What we hope to do is capitalize on the momentum created here to date with various developments that are ongoing with a commitment to mixed-use development and creating a place to live, work, play and learn.”

With Bailey and North District Phase I developed – except for two small power plant buildings Front Street Capital has committed to buy – Partin and Pleasants said they are now focused on developing the next 30 acres, aka North District Phase II, which borders Third Street on the north, Business 40 (Salem Parkway) to the south, Chestnut Street to the west and U.S. 52 to the east.

‘Facilitators, not developers’

According to Pleasants, the first Phase II building likely would be six to nine stories with 175,000-200,000 square feet on the corner of Third Street and Patterson Avenue, on land adjacent to Phase I. Kicking off with a building of that size would supply early mass and the opportunity for a mixed uses, from retail to office space, while allowing businesses and occupants of the new building to feed off the development already completed.

But Innovation Quarter is open to starting development elsewhere – if a buyer or tenant has a different preference.

“We are facilitators, not developers,” said Pleasants, a longtime commercial real estate player involved in establishing Meridian Realty Group, Forsyth Partners, Carter of the Carolinas and Magnolia Partners. Pleasants came to WFBMC in 2000 and worked with former WFBMC CEO Richard Dean and former R.J. Reynolds CEO Andrew Schindler to put together the property RJR gave to WFBMC for the Innovation Quarter.

“It’s very likely we’ll have a building as soon as we can get one up (with a committed tenant or buyer) – that’s the logical first step,” he said.

Neither Wexford nor WFBMC has a specific timetable for North Phase II, or the South Phase – land south of Salem Parkway (I-40 Business) stretching to U.S. 52 and the border of the Winston-Salem State University campus. The conceptual plan is for North Phase II to be next, though.

“The real focus is trying to attract people from out of town, and get people who need to be here,” Pleasants said. “It’s a strategic exercise in identifying companies to recruit to locate here.”

Don’t expect the same pace

Partin and Pleasants admit that matching the rapid redevelopment of Phase I’s 1.2 million square feet since Wake Forest Biotech Place opened in 2012 will be a tough challenge.

The Innovation Quarter is now home to more than 170 companies, five academic institutions, more than 3,700 workers, 1,800 degree-seeking students and 8,000 workforce trainees. Innovation Quarter currently comprises 2 million square feet of office, laboratory and educational space on its 337 acres. More than 700 apartments and condominiums are within or near the Innovation Quarter. Prior to the announcement about the redevelopment of the 23-1 building into the Bailey South, total investment in the Innovation Quarter was about $800 million.

Many of the buildings in what they call the Innovation Quarter’s North District Phase I required cleanup from past uses by R.J. Reynolds Tobacco Co., which later became Reynolds American Inc.. But the shells provided the basis for an eclectic set of buildings and the advantage of historic tax credits.

One of the most difficult projects involved relocating the former rail line. That line will now provide an elevated, pedestrian-friendly amenity to serve as a focal point of Front Street Capital’s planned development of Building 23-1, which will now be referred to as Bailey South.

Partin said only 40,000 square feet of Phase I is unoccupied – 38,000 of that in the main Bailey building, which didn’t officially open until early this year.

Once the $100 million Wake Forest Biotech Place opened on Patterson Street in 2012, the ball started rolling. Inmar gave the Innovation Quarter a big boost, announcing it would occupy two buildings and bring more than 900 employees.

The next 30 acres are “shovel ready” with all the needed infrastructure, including roads, utilities, communications lines, and a stormwater retention pond. Research Parkway is poised to become a major road into downtown Winston-Salem.

All new construction

But there are no standing buildings in Phase II. Everything must be built from scratch with unique, modern designs compatible with Phase I, and appealing to the tech community and its workforce, increasingly comprised of millennials. Wexford and Wake Forest Baptist agree that the phase must be integrated mixed-use development with an urban feel, much like Phase I.

Partin and Pleasants said Phase II, owned by Wake Forest Innovation Quarter Holdings LLC, should have between 2 million and 2.5 million square feet of development.

Partin said the natural progression of development would being in the “neck” near the intersection of Third Street and the Norfolk Southern Railroad tracks near Chestnut Street and then move southward to Salem Parkway.

“We definitely want scale,” Partin said. “We want a downtown feel with six-to-eight-story buildings and parking decks.”

Pleasants credits Stitch Design Shop of Winston-Salem with converting the former RJR buildings into unique, creative and modern-style buildings fitting for a high-tech, innovative district. He cites the Bailey Power Plant as a prime example.

Tenants or property buyers – Pleasants said WFBMC will consider both on an ad hoc basis – must conform to the Innovation Quarter’s commitment to research, business and education in biomedical science, information technology, digital media, clinical services and advanced materials.

Advantages over Phase I

Despite the lack of existing structures – and the tax credits that can come with them – Pleasants said Phase II will have some advantages over Phase I, such as the strong working relationships now in place with Wexford, Innovation Quarter apartment developers such as Grubb Properties (Link Apartments Innovation Quarter) and Pennrose Properties (Plant 64), as well as city, county, state and federal government.

“We have critical mass, services and momentum,” Pleasants said. “We have solid relationships with great partners who all have sufficient capital.”

The Innovation Quarter also has Bailey Park, which has become a regular venue for community events ranging from monthly yoga sessions to the annual Gears and Guitars concert series. Plus, the 1.7 mile Long Branch Trail, which connects to the Salem Creek Pathway, is also expected to attract businesses and residents.

“I think the goal is, in 10 years, everyone will consider all of the Innovation Quarter as part of downtown,” Partin said.


Source: Triad Business Journal by John Brasier  |  June 6, 2018