The next phase of development at Pappas Properties‘ project in midtown Charlotte will include a hotel and a nine-story office building with ground-floor retail space. A 150-room Tapestry Collection by Hilton hotel, an upscale brand for the hotelier, and a building with up to 210,000 square feet of office space and 20,000 square feet of retail — likely restaurants — are planned at Pappas’ 7-acre project near the Charlotte Regional Realtor Association headquarters.
The $28 million CRRA headquarters wrapped up construction this summer, and Pappas and its joint venture partner, Welltower Inc. (NYSE: WELL), are currently underway on a two-building medical office project for Atrium Health.
Pappas’ and Welltower’s midtown site includes most of the acreage between Harding Place and Pearl Park Way along Kenilworth Avenue. The development also includes a number of infrastructure projects, including the extension of Pearl Park Way, which will connect to Baxter Street by the spring, and an expanded Pearl Street Park.
In 2017, a $4.4 million tax increment grant was awarded to Pappas Properties from the city for the infrastructure projects. A land swap between the city, Mecklenburg County and the Charlotte Housing Authority also occurred to accommodate the private development, road projects and larger park.
The $40 million hotel, which will have a name unique to Charlotte, will be developed on the site of the former CRRA headquarters, at Berkeley Avenue and Pearl Park Way. The office building is slated for the corner of Kenilworth Avenue and Pearl Park Way.
“With the addition of the Hilton Tapestry to the development plan, we really feel like we have an outstanding amenity package between the hotel, the 10 restaurants in the Metropolitan and three restaurants we have planned for the first floor of the mixed-use building,” said Peter A. Pappas, founder and CEO of Pappas Properties.
Paired with proximity to the expanded Pearl Street Park and the Little Sugar Creek Greenway, Pappas said he believes the site will prove to be attractive for office tenants.
Construction on the hotel and the office building is expected to begin in the third quarter of 2020, around the time when the first phase of the Atrium project will deliver. That development will include the new home of Atrium’s Sanger Heart & Vascular Institute in the first phase and clinical offices for neurology and digestive health in the second. A parking deck under construction now, which will serve multiple uses for the site, will also wrap up by next fall.
Pappas said the actual size of the planned office building, including number of floors and total square footage, will depend on tenant demand. The firm formally kicked off pre-leasing for the building at a broker event on Wednesday. Though it’s being marketed as a corporate office building, it could potentially be converted into medical office space if demand necessitates that instead, Pappas continued. Floorplates at the proposed tower could measure up to 30,000 square feet.
Alternately, the site could accommodate two smaller office buildings, said Louis Stephens, managing director at JLL, who is handling pre-leasing of the new office and retail development. The leasing rate for the office space will likely be in the low $40 per-square-foot range.