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New tenants may spur American Tobacco progress

After years of anticipation, development at the American Tobacco factory may finally be on track following announcements of further investment in the project.

Detroit software company Compuware has signed a letter of intent to rent space in the complex, and Duke has indicated it may rent more space than originally planned. Also, pharmaceutical giant GlaxoSmithKline may invest as well. The developments may prod project director Capitol Broadcasting to proceed with the renovation and development of the 1.1-million square-foot project.

"We are very closely examining the possibility of locating part of our business there," said Compuware spokesperson Doug Kuiper. Kuiper would not give any other details about the company's ongoing negotiations with Capitol Broadcasting.

Also last week, the University tentatively offered to rent an additional 50,000 square feet to an already-planned 100,000 square feet, said Executive Vice President Tallman Trask.

Duke's space at American Tobacco would be used primarily for administrative support activities, freeing up campus space and consolidating several leases the University has around the city, Trask said. Trask said the University has identified more demands for space, including computing activities.

"[They] don't really need to be local and occupy fairly valuable and expensive space both on and off campus and will also benefit from being part of what will be a fairly high-tech development," Trask said.

Trask said the University has a letter of intent but has not signed a contract.

Capitol may find a third tenant in GlaxoSmithKline.

"We're approaching the opportunity seriously," said Nancy Pekarek, a GlaxoSmithKline spokesperson. "I don't know when we might make a decision."

The three potential investors have reignited hope that American Tobacco will become a reality, providing a commercial and business center in downtown Durham. Capitol has been planning the project for three years.

"First and foremost, this is a very, very hard project," said company vice president Mike Hill. "Secondly, we are a broadcast company that got into this project out of a desire to help downtown Durham, so we didn't have experience with this."

Hill cited the difficulty in coordinating talks with the city as well as potential tenants. Although Capitol reached an agreement with the city and the county about public funds in May 2000, changes in administration have necessitated additional negotiation.

"The city has been in constant talks with American Tobacco developers," said Thomas Stith, a City Council at-large member. "What they've asked is for us to provide infrastructure through the construction of parking decks in the area."

Hill estimated that the first stage of development at American Tobacco would require $17 to $20 million from the public sector. The source of the city's funding, however, is still being negotiated, Stith said. Durham has a downtown development fund currently comprising about $2 million, amassed through a one-cent increase in the property tax two years ago.

Additional revenue could be raised through a variety of methods, such as an internal cost cut, a bond referendum or a further increase in the property tax, Stith said.

This first development phase of six will cover 400,000 square feet of the complex, Hill said. The six phases combined will cost between $165 and $180 million from private sources and between $40 and $45 million from the city and county. Hill did not give a date for completion of the project.

"We think in terms of six to eight years and pray that it will be a lot sooner than that," Hill said.


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