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City Council receives report on demand for downtown living, office space

By Natalie Anderson
natalie.anderson@salisburypost.com

SALISBURY — City Council members on Tuesday received market data about the demand and feasibility of future downtown development from the UNC School of Government.

In January, Salisbury Community Planning Services engaged the UNC School of Government’s Development Finance Initiative to complete a Downtown Opportunity Site Selection, as well as a pre-development analysis for Kesler Mills and the Civic Center, which are both owned by the city. Reviewing these areas determines the interest and feasibility of further development in office, retail, housing and hospitality spaces

Sonyia Turner and Rory Dowlings, both from the UNC School of Government, presented market analyses findings to the council, noting that “community scans” were used to review demographic data, income data, economic trends, tax parcel data and supply and demand trends in downtown Salisbury as well as Kesler Mills and the Salisbury Civic Center.

Turner added that pre-COVID data was primarily used, but some consideration of the pandemic impact has been factored in to the findings.

For downtown, the focus was on the demand for office, retail, multi-family and hospitality spaces. Multi-family and single-family housing spaces were the focus for Kesler Mills, and hospitality was the focus for the Civic Center.

Downtown Salisbury traditionally has been the hub for offices in the county. Turner said total office space downtown demanded over the next five years ranges between 36,000 square feet and 47,000 square feet. Available office space has decreased and so have rent costs, which is unusual and suggests there’s “aging office inventory” downtown, Turner said.

COVID-19 inevitably has an effect on the demand for office space downtown, particularly with the rise in remote working, which results in a lower worker density in office spaces. The worst-case scenario would equate to a 50% to 60% reduction in the demand for office space downtown, she said.

Turner said between 4,500 to 7,200 square feet of retail space downtown is demanded over the next five years.

Retail visits fell by 50% in April and have plateaued at 25% fewer visits in recent months, with food and beverage services most impacted. Turner added that the county is projecting a 4% reduction in downtown sales. Further, Salisbury’s low rental rate of $12.50 per square foot may pose a challenge for new retail development. The average rate is $15 per square foot.

It’s projected that in the next five years there will be about 125 units of multi-family housing demanded in downtown Salisbury and between 400-575 units throughout the city of Salisbury.

Councilman Brian Miller asked if the city should invest in more multi-family spaces to drive demand for retail space. Dowling said the Empire Hotel will serve as a good model to determine stability and demand in the market because it will add about 50% more residential space. It’s typical for multifamily housing to drive more retail development, Dowling added.

Turner said 16% of North Carolinians didn’t pay their rent in July, and an additional 7% deferred their rent, meaning the “the story is still unfolding” about the pandemic’s impact, particularly as eviction moratoriums and more pandemic relief has yet to be determined.

The School of Government’s analysis showed young professionals and senior citizens are expected to drive the demand for single-family housing over the next five years, with a new single-family asking price averaging around $200,000 by 2024. The demand is projected to be 700-800 new single-family housing units by 2024.

A lower median household income and lower home values may make new single-family housing development challenging. The median household income by 2024 is projected to be $45,000 in Salisbury, while the average is projected to be $58,000 by 2024.

Regarding the hospitality potential for the Civic Center, Dowling said Salisbury shows strong market indicators regarding year-round and mid-week occupancy as well as proximity to restaurants, nightlife, highways and historic attractions. However, the hospitality industry will continue to be tested over the next 24 months due to COVID-19.

Mayor Pro Tem Al Heggins asked if community members had been contacted for input. Turner said that would be part of phase two work and taken into consideration before filing any Request for Proposals.

Turner said she met with city staff in March, May and August and will continue conducting financial and site analyses before returning to the council with recommendations.

Also at the meeting, City Engineer Wendy Brindle requested council members consider the annexation of Rowan Woodland Apartments, located at 2715 Statesville Blvd. The lot is currently vacant and could house 240 units.

During rezoning in February, developers said rents would range in price from $850 to $1,300 per month, include units ranging from one to three bedrooms and amount to 725 to 1,150 square feet. Brindle told council members the apartment complex generate $72,000 in property tax revenue for the city

No one spoke during the public hearing for the annexation, but it will remain open for 24 hours. Public comments can be sent to city clerk Kelly Baker at kbake@salisburync.gov.

If approved, the annexation would be effective on Sept. 15, and the city would return to council members with an ordinance for consideration. Additionally, construction plans are still being reviewed.

Also at the meeting:

  • Council members approved modifying first-class mail notification for public hearings based on a presentation from the Aug. 18 City Council meeting. The proposal would modify the current mailed notification to 250 feet for legislative causes, such as rezonings and conditional district rezonings, and 100 feet for quasi-judicial hearings, which cover special use permits, Historic Preservation Commission matters, variances and appeals. Doing so would modify Chapter 15 of the Land Development Ordinance Text Amendment TA-01-2020.
  • The council authorized the mayor to execute an agreement with Pilot Travel Centers, LLC, for the Peeler Road Water Main project. Annexation is proposed as well for a project to connect a Pilot Travel Center at 985 Peeler Road.
  • Council members authorized the city manager to renew a contract with Atlantic Coast Contractors, Inc., for $500,000 for construction related to the fifth phase of the Sanitary Sewer Rehabilitation Project. The contract costs were included in the 2020-21 fiscal year budget.
  • City council members awarded a contract to Diversified LLC. in the amount of $348,584 for construction of the Rowan Regional Crime Center. The project is funded by a Strategies for Policing Innovation grant awarded by the U.S. Department of Justice in 2019.
  • City council members awarded Salisbury Police Officer Rebecca Sexton her sidearm and badge in recognition of her retirement on Oct. 3.
  • The council appointed locals to the Greenway, Bicycle and Pedestrian Committee. New appointees include Edward Hirst, Amy Smith and Lisa Wear, who will serve until March 2021; Carole Massey, Sashi Sabaratnam and John Wear, who will serve until March 2022; along with Sharon Earnhardt, Dylan Horne, Sean Meyers, Andrew Pitner and Mary Rosser, who all will serve until March 2023.
  • Mayor Karen Alexander proclaimed the city observe Suicide Prevention Month and Salisbury Go Transit Month throughout September, along with First Responder’s Day on Sept. 11.

Contact reporter Natalie Anderson at 704-797-4246.

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