The Chapel Hill Town Council gave final approval for the Obey Creek Project back in 2015. Despite twelve versions of a development agreement needed and six years before being passed, council members at the time expressed excitement for the potential of retail and housing in a 1.5-million square-foot mixed-use development across from the Southern Village community.
Since then, however, the project has ground entirely to a halt.
Ben Perry, Senior Managing Director of Finance for East West Partners, recently spoke to Chapelboro about the development, which was hoped to bring a larger department or grocery store to part of Obey Creek with housing available in the upper floors.
“Our thought in 2009-2010 was responding to the real perceived need in Chapel Hill: a real retail-driven, mixed-use project,” he describes. “Our idea was to do a project that was certainly very retail-oriented, but with other uses above it, on the 40 acres hard by the highway.”
Town staff estimated the project could bring in up to $1 million for Chapel Hill’s government every year. But the approval process hit snags as community members and town council members alike expressed concern about traffic, density and possible environmental issues, causing the negotiation period to craft an entitlement for Obey Creek to extend years.
Perry says ultimately, the entitlement given to East West Partners, who were hired from an out-of-town investor that owned the land, had very specific options for the developers to build in the lowest level of the buildings. He says interest from smaller businesses, and around the proposed housing, led to initial buzz in 2015 and 2016.
A 3D model of the proposed Obey Creek Project in early 2015. (Concept art via East West Partners.)
“Once we were approved, that’s when you can finally start marketing to tenants to come in,” says Perry. “And we had really strong reaction — the movie theaters, the smaller users were very interested. We just had an entitlement [where] we couldn’t fill up the ground floor space. That had to be retail, per the entitlement.”
It was big box stores, however, that developers struggled to recruit for Obey Creek. Perry says East West Partners began to see a shift around large retail even before the project’s approval. As months and years progressed, he says, the “prescriptive” entitlement approved for the project made it so attracting a larger corporation to fill the centerpiece of a potential building became a tall order.
Pointing to the addition of stores like Target off Franklin Street and the rise of online shopping since 2015, the developer describes the retail landscape in Chapel Hill as shifted to the point where demand for Obey Creek’s central purpose is very low.
“So, we’re kind of on hold,” Perry says of the project in 2020, “either waiting for the market to come back to us or for the market to establish clarity for what should go there for us to revisit the entitlement.”
As construction costs have dropped amid the COVID-19 pandemic and the Chapel Hill government aims to move on other proposed development projects, Perry says East West Partners have shifted their focus elsewhere. He still describes the area as a promising piece of property and says he believes something could ultimately be built there that adds something new to the community.
“Had we had a three-year entitlement process,” says Perry, “I am to this day convinced that this project would be on the ground, built, and, pandemic-aside, would’ve been doing really well and been a great addition to the community. But there’s a saying in our business that time kills all deals. And it killed this one, at least for the time being.”
Photo via East West Partners.
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