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Q and A with Clay Grubb

by Mark Peres

January 5,2006

Your company has positioned itself as an urban, infill, mixed use developer. Why did you choose that market?

Several factors led us to this strategy. First, a growing realization that national firms coming into Charlotte could build a lot faster and cheaper than we could in the suburbs and around the I-485 interchanges. Second, our market trends analysis in the late ‘90s indicated strong and growing demand for mixed-use infill projects to combat sprawl and revitalize historic neighborhoods. And third, the reality that these kinds of projects are never cookie-cutter – they require local expertise, community relationships, and the blend of skills we’ve developed over four decades in the residential, retail and office markets. In this kind of market, we believe that we can add value and compete strongly with anyone.

What principles of development guide your work?

Our first principle is simply to create value – for our communities, our investors and ourselves. If that doesn’t happen, nothing else will either. In addition, we don’t get involved in anything we wouldn’t want to own 10 years down the road. This leads us to projects that age well in prime locations, which means we’ll have numerous exit opportunities along the way as well as a comfort level in holding the assets if we choose or need to do so. Other than that, we try to follow Wayne Gretsky’s advice and “skate to where the puck is going to be, not to where it is.” We’ve enjoyed our best results over the years when we’ve gotten out ahead of the curve, but whether we’re working on a cutting edge project or our core portfolio, a “whatever it takes” mentality is often the biggest factor in our success.

What development challenges and opportunities do inner-ring neighborhoods in Charlotte present?

The opportunities probably go without saying – enhancing and revitalizing the communities closest to the urban core, and even building bridges between those communities with the flow of private and public capital and resources. Mixed-use urban infill is not for the faint of heart, though – it is time-consuming, expensive and unpredictable. One of the lessons we learned with Latta Pavilion in Dilworth, which was coming to market right around 9/11, was to design more flexibility into a project in order to accommodate unexpected swings in the consumer and financial markets. Getting all the land under control is also critical – our Morrison project in South Park, for example, is much simpler than what we’re doing along Elizabeth Avenue.

Many people believe that Charlotte is a town controlled and driven by developers. What's your response?

You could predict my response, of course, but I’d have to disagree. Good development shapes the image of a city and attracts the growth and vibrancy all of us who live here want see. The city knows this, of course, and has an appreciation for the challenges inherent in infill mixed-use development. So do the banks, who have developed or influenced more of Charlotte’s landscape than all the developers combined. The Ratcliffe is a prime example of Wachovia pushing against conventional wisdom in favor of an upscale landmark project that went on to sell out in six months and raise the bar for center city residential development. In the end, we have an influx of employers, families, restaurants, shopping, sports and entertainment – as well as revitalization projects that have, or will, transform neighborhoods and lives across the city. The city knows what it wants and is helpful to developers who are aligned with that vision, but they certainly haven’t forgotten how to say “no.”

What projects by other developers are noteworthy to you?

Trademark, Avenue, The Vue…all of the Uptown condominium projects are impressive. They’re really setting a tone for the future, as did The Ratcliffe and 400 North Church when they were developed. Not to mention the whole First Ward project, because it combines with the others to offer a spectrum of residential options within the city. This spectrum is important – I’ve said since 1999 that it wasn’t possible to overbuild the center city, but you can price people out of the market, and it’s important not to do that. SouthPark Mall is incredibly noteworthy as well. Simon has re-envisioned retail in this market, transforming an aging mall into the strongest retail environment between Atlanta and Washington, DC. We’re all seeing retailers and restaurants in the area now that previously wouldn’t have even considered locating in Charlotte. Simon’s work there has been just a great boost to South Park and the city overall.

How is the Elizabeth Avenue project coming along?

Well, it’s a great project for Grubb Properties and for Charlotte – but one that is very complex – so we’re hopefully optimistic that the pieces will continue to fall in place. So far, our first spec building – 1523 Elizabeth Avenue – is almost fully leased and we’ve placed two high-visibility tenants – Carpe Diem restaurant and NOFO gift shop and café – into beautifully renovated existing spaces where they both report stronger-than-ever sales. We think they’re strongly validating the appeal of this location for the right uses. This year is key, though – the city begins work along Elizabeth Avenue in preparation for widening the sidewalks and laying tracks for the streetcar line, and we’ll start construction on the Whole Foods site at the corner of 4th Street, Hawthorne and Elizabeth. The last piece of that puzzle is relocating our tenant Burger King to make way for Whole Foods. Burger King has bought into the larger vision and the importance of Elizabeth Avenue to the city – it’s just a matter of working out the details of the move.

What development issue needs greater attention?

As a city and as developers, we need to make sure we don’t leave working people behind. Charlotte has a long history – sometimes good, sometimes not – of being a place where people from all walks of life mingled together throughout the city. Going forward, there are several key components to getting this right, in no particular order. One, we need to continue integrating affordable housing into Uptown development. Two, more public-private partnerships are needed to reinvigorate historic neighborhoods. The Piedmont Courts revitalization project alongside the proposed Kroc Center campus in Belmont is a great example of this in action…development bringing transportation, education, recreation, social services and not just jobs but networking opportunities to our most challenged communities. And third, we need to address any impact of displacing working-class families as neighborhoods undergo transformation – every citizen and every family has a stake in the future of this city, and each of us deserves a voice in creating the vision for that future.

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