In the summer of 2002, Cary entrepreneur Don Piper was riding in a friend's car when he saw the downtown stretch of Main Street for the first time in many years. "I just gasped at the devastation. Nothing was happening with these beautiful old structures," he remembers.
Piper, who describes himself as a "serial entrepreneur," has been a venture capitalist in Triangle technology companies for years, and most recently served as chairman of nTouch, a Raleigh clinical research company. After falling in love with downtown Durham's neglected architecture, he decided to make its potential his full-time project. His year-long effort and its disappointing conclusion speak volumes about the complex challenges required to realize a dream of connecting creative people to the economic core of a city.
"What really brought me here was that social entrepreneurial commitment," Piper explains, as we sit inside the Blue Coffee Company on Corcoran Street, very near the building Piper wanted to turn into an artists' paradise. "I wanted to do something that wasn't dedicated entirely to the bottom line, but where social good was the first priority, and financial success was simply required in order to allow the project to take place."
Piper took months examining different buildings before making an offer to Wade Penny on the 89-year-old Bargain Furniture building at 309 East Chapel Hill St. A stone's throw from the Durham Arts Council and a mere stumbling distance from the Armory, it anchors a corner of what was described as the "arts corridor" in the 1999 Durham Master Plan. "It just seemed like a perfect fit," he says.
Piper had in mind a model that's been successful in the Triangle and in cities all over the world. He enlisted architect John Warasila, chairman of Downtown Durham Inc., to design it. "We put together a proposal to convert the top three floors to working-living artist lofts and studios with the main floor very similar to the Artspace concept in downtown Raleigh, with galleries that are open [for] the public [to] walk through, and the artists are on site 30 hours a week. There are a number of precedents. The Kress Emporium in Asheville, the Cotton Company in Wake Forest. I went and visited three similar developments in Chicago. There are examples all around the country."
A new conventional wisdom has been spreading among small-scale entrepreneurs, an idea articulated in Richard Florida's 2002 book The Rise of the Creative Class, in which Piper is a believer: "The first step to develop a deteriorated downtown almost universally is to bring in the arts community," he says. "Bring in the indigenous craftspeople to set up studios and galleries, because that tends to attract this creative class, not just artists themselves but people who want to purchase their art, and then restaurateurs that attract other restaurateurs and other merchants. So it's a catalyst, and it's been shown again and again."
He contacted the Durham Arts Council and the Orange County Arts Commission to set up focus groups in Durham, Hillsborough and Carrboro, inviting folks who might be interested in living or working in the spaces to share their feedback on the project's design. In March, about two dozen people came to the Durham Arts Council, where Piper and Warasila had installed a mockup of one of the apartments inside a conference room, so participants could walk through, to get a sense of the space and features.
The design was stark, but it took advantage of the building's solid wood floors, 22-inch-thich walls and high ceilings. The architectural details (concrete countertops, window seats) were inexpensive, in an attempt to qualify approximately 30 percent of the units as affordable housing. "I wanted this to be something that the poor, starving artist could participate in, not something that would be skewed only to higher end, yuppified," Piper says.
But given the extent of the renovations, the end cost of rent, ranging from $660 to $975 for a one-bedroom apartment, was just too high, artists said.
Believe it or not, people live in downtown Durham. You wouldn't know it from the ghost town feel of the paper-covered shop windows, but the vacancy rate in the 356 available apartments is nearly zero, while the line of people eager to sign up for newly renovated spaces is growing all the time.
Piper faced the much riskier challenge of filling ground-floor commercial space. He needed an anchor tenant. The Durham Arts Council was excited about a small gallery space, as were other arts groups across the state, including the Penland School, Seagrove potters guild and the Southern Highland Arts Guild--groups who could only realistically take on small pieces of the 5,000 sq. ft. ground floor. Facing budget cuts themselves, not enough of the organizations could commit to signing on.
"Nobody wanted to be first," Piper says. "The artists didn't want to be first. Nor did the museums, nor did the arts guilds."
Banks usually see restaurants as too risky, but an experienced, successful restaurateur willing to buy into the arts concept, Piper thought, could make it work. He approached prolific restaurateur Giorgios Bakatsias. "He loved the concept," Piper says. But Bakatsias was busy trying to launch his Erwin Square restaurant, Verde.
The City of Durham tried hard to help, Piper says. Alan De Lisle, director of the city's Office of Economic Development, worked closely with him to take advantage of as many incentive programs as were available. Unfortunately, banks sometimes saw those programs as a disincentive, because the city didn't alleviate the financial risk to them, Piper says.
"Don actually got his numbers pretty close to working," Warasila says. "The real trouble he ran into was financing."
By this point, Piper had used up much of his own cash, which amounted to about $25,000. He approached several banks before getting a good response from Harrington Bank of Chapel Hill. They required an appraisal before they'd sign a deal, and Piper got the feeling right away that the appraiser, Lee Butzin, wouldn't share his vision. "He walked in and said, 'I can already tell you this project won't work.' He hadn't even looked at it."
Eight weeks later, in March 2003, the appraisal concluded that Piper's idea wouldn't fly. Piper still remembers the words: "Our opinion is that the highest and best use of the site, as vacant and available, is to leave the site fallow and await the coming renaissance of downtown Durham." Piper, who wanted to jump-start that renaissance, was devastated.
Butzin, who declined to comment on the details of the appraisal, says: "Right now there's very high [commercial] vacancy in downtown Durham, and that really says it all. It's always risky to add space in a high vacancy market." Butzin says he does know of successful live-work studio spaces like the one Piper envisioned, but "most of the successful art space that I've found in the Triangle is either publicly subsidized or very low rent. If you're talking about renovating an entire downtown Durham building, you have to charge higher rents."
When it all fell apart, Piper gave his blessing to Warasila to do something without him. "I wanted to see the property in the hands of somebody who would continue pursuit of the dream, rather than just some Joe coming in wanting to optimize the real estate opportunity, and who knows what the development would be."
Last month, Warasila announced that he and Raleigh developer Greg Hatem would buy the Bargain Furniture building, along with two more adjacent buildings, 50,000 square feet in all. Hatem is known in Raleigh for buying neglected downtown buildings and turning them into successful businesses, such as the Duck and Dumpling restaurant on Moore Square. They plan to turn the row of buildings into residential and office space.
"The main thing we've learned is that there is a definite market out there for it," Warasila says of the artist loft concept. "The real issue comes down to price point in a lot of ways." He says he and Hatem would love to have creative people fill their apartments, but they're not targeting the artistic community in the same way Piper did.
"There's a whole other market out there that the artists actually compete with, which is people who are paying and willing to pay and are lining up to do it," he says, recognizing the problem that worries the arts community. "It puts the artists in a tough place and we've got to find a way to serve that part of the community."
Piper is still in love with downtown Durham. "The energy in this place is just so encouraging," he says. "I just like being around that."