Skyline Center
History
In 2023, the City of Wilmington acquired a 12.5-acre office campus in northern downtown, which includes a 1,022-space parking deck, a large office building, and two adjoining development tracts. The acquisition of the office campus allowed the city to add much-needed parking capacity near Riverfront Park and consolidate numerous city departments under one roof for better operations and customer service.
No tax increase was required to fund the purchase of the office campus, which was included in the city’s FY24 budget. As operations continue to transition to the new campus, the city intends to sell several vacated city buildings and surplus properties to offset the $68 million purchase price. The historic Thalian Hall/City Hall building will not be sold.
Mayor Bill Saffo said the new office campus represents “a creative and cost-effective solution to growing demands on downtown parking and city operations.”
“This adds over 1,000 parking spaces near our very successful Riverfront Park and Live Oak Bank Pavilion, brings together multiple city operations into one building, and saves millions of dollars by allowing the city to sell off aging facilities. Our capacity to make such a major investment in the future without a tax increase speaks to the city’s historically strong financial position,” said Mayor Saffo.
The city’s purchase price represents a $43.3 million savings over an appraised market value of $111.3 million for the office campus, and a $55+ million savings over construction alternatives to meet the city’s parking and operational space needs.
The city made an offer to purchase the office campus in January 2023. In May, city leaders made a formal presentation to the North Carolina Local Government Commission, which must approve all such transactions by local governments. The commission voted in June to formally approve the city’s purchase plan. Following a months-long due diligence period, the city closed on the purchase on July 13. The city initiated a request for proposals for architectural consulting services to assist with transitioning its operations into the new building. The city anticipates moving into the building over the course of several months as occupancy plans and improvements are completed.
The office campus originally opened in 2007 as the headquarters of PPD, now the clinical research business of Thermo Fisher Scientific. While maintaining its commitment to Wilmington as a hub for PPD’s operations, Thermo Fisher first announced its intention to sell the campus in November 2022. As part of the sale agreement, PPD will lease two floors of the building for its Wilmington office for three years with options to extend the lease.
Consolidating Operations
Over the course of many years, city departments have grown to occupy multiple office facilities throughout the city, which include several aging facilities with growing costs to maintain and operate. For example, the city’s largest office building, located at 305 Chestnut St., was built in 1959. A recent maintenance report identified $4.2 million in maintenance and repair needs over the next five years for this one building alone.
Since the 1990s, the city has conducted long-term space needs assessments to evaluate the status of current facilities and future space needs. The most recent was conducted by an architecture firm in 2021 and 2022, estimating $90 to $96 million in capital needs to redevelop an appropriate-sized city administration building on existing city property. (Not including the cost of relocating staff while redeveloping the site.)
Outside-The-Box Solution
In April 2022, Thermo Fisher Scientific announced its intention to sell the PPD headquarters facilities in Wilmington’s northern downtown, while still maintaining a base for operations in the city. This unique group of assets includes a large parking deck, ideal to meet growing parking needs in northern downtown and in close proximity to the city’s recently opened Riverfront Park and Live Oak Bank Pavilion, which hosts multiple sold-out concerts at its 7,200-capacity live music venue. The campus also includes a large office building, which could solve the city’s long-term operational space needs. These facilities are situated on 12.5 acres, which includes two adjacent undeveloped tracts.
Cost estimates to meet the city’s parking and operational space needs through the traditional means of construction could top $123-129 million, with approximately $33.1 million for a 1,000-space parking deck and $90 to $96 million for a redeveloped municipal operations building. The city’s purchase price of $68 million for the entire 12.5-acre campus, presents an outside-the-box solution to meet the city’s parking and operational space needs at a fraction of the cost of construction.
In addition to the cost savings from repurposing the former PPD headquarters office building and parking deck for public purposes, the city intends to offset its $68 million purchase price by selling aging office buildings and surplus properties. Surplus building and property sales could potentially offset the purchase price by as much as half or more. With these properties already declared surplus by City Council, staff are developing a plan for selling them that aims to yield the highest purchase price for surplus assets.
The city can offset costs of building operations by leasing excess office space not used for city operations at market rate. As part of the conditions of the purchase, Thermo Fisher Scientific has agreed to a three-year lease for two floors of the building with options to extend its lease.
What is included in the purchase?
For $68 million, the City of Wilmington has acquired 12.5 acres, a large parking deck with 1,022 spaces, and a large office building.
The parking deck is ideally situated nearby the city’s highly successful Riverfront Park and Live Oak Bank Pavilion and solves a major parking need for northern downtown. The office building is large enough to consolidate numerous city operations under one roof, while leasing excess space at market rate to offset building operation costs. Excess land and surplus city buildings are being sold to offset the purchase price.
Why purchase the campus?
Purchasing this campus solves critical needs for parking in northern downtown and long-term space for city operations at a fraction of the cost to build new facilities. A third-party parking study identified unmet parking needs of approximately 1,000 spaces. Building a parking facility to meet that need would cost approximately $33.1 million, including the cost of land and construction. A third-party space needs study estimated construction costs of $90-$96 million to address space needs for city operations. Together, these needs range from $123-$129 million. The city’s purchase price of $68 million for the new downtown campus represents cost savings of $55-$61 million over the cost of construction alternatives.
The city also benefits from this purchase by selling surplus city buildings and property after transitioning operations to the new campus. These surplus sales could offset the purchase price of the new campus by as much as half, if not more. The city would also save millions of dollars by foregoing maintenance and repair costs to aging facilities and leasing excess office space in the new building.
What is the value?
The total market value of the new downtown campus is $111.3 million, which includes 12.5 acres, a large parking deck, and a large office building. The city’s purchase price of $68 million represents a $43.3 million discount to appraised market value.
What is the condition of the campus?
The City of Wilmington had environmental review and facility condition assessments performed as part of the due diligence process. Environmental reviews found the property to be in compliance with environmental quality and brownfield redevelopment terms. A facility condition assessment was performed to confirm the facility’s condition, identify near-term maintenance needs, and enable the city to effectively plan for building maintenance costs.
When will the parking deck open to the public?
The deck is open and available for general public parking, as well as special event and concert parking. The city installed technology and integrated the parking deck into the city’s public parking system.
When will the building be open to the public?
The city has awarded a contract for architectural needs associated with developing and facilitating plans to transition city operations into the new office building. The city estimates a transition period of up to 12 months to transition operations into the newly acquired building and upfit it for public purposes.
What buildings are the city selling?
City Council declared the following properties as surplus contingent upon the successful purchase of a new downtown campus:
- 305 Chestnut Street
- 315 and 319 Chestnut Street
- 210 Chestnut Street
- 115 N. Third Street
- 414 Chestnut Street - Suite 2
- 302 Willard Street
- 1702 Burnett Boulevard
- 102 Wellington Avenue.
In addition to these properties, undeveloped properties adjacent to the new downtown campus may be declared surplus. City staff are working on schedule to begin selling these surplus properties. This schedule will take into account space needs for the transition of city operations from these properties into the newly acquired building.
What about Thalian Hall?
The historic Thalian Hall/City Hall building has served as the seat of city government and arts in the City of Wilmington since 1858. At that time, the City of Wilmington’s population was less than 10,000. The city has long since outgrown the facility as a center of government operations but has continued to use the facility for City Council meetings and office space for a handful of administrators and staff. While the city intends to consolidate these governmental functions at its new building, the city also remains committed to owning and preserving the historic Thalian Hall/City Hall building for future generations.