The Grounds well positioned as scarcity of modern spaces hinders out-of-market retailers
A rendering shows the plan for the first phase of The Grounds, a mixed-use development near Wake Forest University by Front Street Capital and Carter.
Front Street Capital / Carter
At a time when a scarcity of modern retail space is hindering out-of-market concepts from coming into the Triad, the high-profile project The Grounds in Winston-Salem might just give the Twin City a golden opportunity.
That was the opinion of Cindy Christopher, principal and broker of Christopher Commercial Real Estate. She and Mike Longmore, senior vice president of commercial real estate at Greensboro-based developer and builder Koury Corp., discussed the region's evolving retail landscape as part of Thursday's CRE Awards program at the Blue Heron Event Center in High Point.
Christopher, a Wake Forest graduate, said she believes that The Grounds will be an opportunity for Winston-Salem "equally as exciting" as when Innovation Quarter began taking shape in the city's downtown. The Grounds, a $150 million mixed-use development, is planned on about 100 acres bounded by Whitaker Park, Wake Forest and the Boston-Thurmond neighborhood.
Wake Forest, which owns the land, enlisted Winston-Salem’s Front Street Capital and Atlanta real estate development firm Carter for the project, in partnership with the city of Winston-Salem.
The first phase, which is set to break ground in December, will include four components: infrastructure and greenways; a 100,000-square-foot office building for WFU; a 240-unit residential community; and a 40,000-square-foot retail village. The second part of Phase 1 is slated to include a hospitality component such as a hotel or condo hotel.
Christopher noted that Wake Forest has never had a dedicated street in the way that UNC-Chapel Hill has Franklin Street or North Carolina State University has Hillsborough Street, she said, but The Grounds offers that potential.
She said national retailers have typically been more attracted to Greensboro than Winston-Salem, whereas Winston-Salem has seen an "organic, healthy market" driven by many locally owned restaurants and businesses that have been able to thrive. More than simply attracting local tenants, The Grounds she believes will also attract national and out-of-market restaurants and retailers.
"I think it will be a combination," she said. "It's a very exciting project, and then to be near the athletic facilities, we have a lot going on."
Longmore said many retailers from larger markets such as Charlotte and Raleigh are looking to come to the region but are having difficulties finding space. He said that retail vacancy in the Triad is around 5% percent. Included in that are vacancies in older properties, but even some of those have been backfilled. As an example, local retail chain Beautisa in August opened its fifth location in the region, taking up 22,000 square feet in the Golden Gate Shopping Center in Greensboro that previously hosted a trampoline park.
But newly built space is limited. Longmore said that as the retail market across the country has evolved, about 20 years ago "we pretty much stopped building retail," with the exception of the construction of a few specific big box retail stores.
"We talk about how it used to be 'Build the grocery store and the houses will come around' — that's no longer the case with retail. The houses come around and then the grocery stores are built," he said.
The result is that retailers are competing for a minimal amount of ideal space, such as restaurant space, end cap space and grocery space, which Longmore said "is going to be challenging."
"It is very difficult to build a big box center nowadays," he said.
More often than not, the larger scale centers that are built involve grocery tenants, with West Edge in Winston-Salem and the Palladium South project in High Point now under development as recent examples. The Triad region has been "right in the middle of the grocery line" for the last several years, Longmore said. And Publix, with its massive distribution center built east of Greensboro, is not going away as it continues to build its presence in Virginia and North Carolina, he said.
Longmore said that part of the evolution of retail has been due to the internet and online shopping. However, he said that people are always going to want to go physical retail stores in order to try on clothes and interact in a physical way.
He also noted that retail is increasingly more than just traditional clothing stores — it also includes medical offices, entertainment uses and restaurants. A couple of examples in Koury's portfolio are landing Epic Chophouse, a concept from Charlotte, in the Village at North Elm, and recently securing a Cone Health Urgent Care for the Village at Grandover. Cone Health also plans to open an urgent care center at West Edge in Winston-Salem in early 2025.
By Elizabeth 'Lilly' Egan – Reporter, Triad Business Journal