Historic Reynolds Building has new owner
WINSTON-SALEM, N.C. — R.J. Reynolds Tobacco Co.’s historic headquarters keeps turning heads, even after 85 years, according to the Winston-Salem Journal.
Officials with the new owner of the building – as of Friday – and its high-end hospitality partner used words such as “pristine,” “impeccable,” “perfect,” and “best adaptive reuse project we’ve ever seen” to describe the appeal of what Mayor Allen Joines affectionately called “a grand old lady.”
The allure was enough to get PMC Property Group to spend $7.8 million to buy the 22-story building, and to invest an estimated $60 million overall in converting it into a mixed-use building. Kimpton Hotels and Restaurant, based San Francisco, will operate a boutique hotel on the bottom six floors. The rest will be developed as 120 luxury rental residential units.
The goal is opening in the fall of 2015, with internal demolition beginning within 30 days, according to Ron Caplan, president and founder of PMC of Philadelphia. He said no decision has been made on what to call the building. The companies say they will have a better feel for the design once interior walls have been removed, giving them a blank slate to build upon.
“We want to make this building a beacon again, a central part of this community for years to come,” Caplan said. “We can’t wait to get started.”
Caplan said the building was the reason why PMC chose Winston-Salem for its entrance into the N.C. market rather than going to Charlotte or Raleigh, both of which are much larger and have more economically vibrant downtowns.
Joe Long, Kimpton’s chief investment officer, said Kimpton is studying a potential site in Charlotte.
There’s also an element of PMC and Kimpton preferring to enter as a bigger fish in a smaller hospitality pond.
“This first foray into North Carolina is long overdue,” Caplan said. “This is about a vibrant and progressive a state as there is on the East Coast. We just hadn’t been able to find the right opportunity until now.
“There is an ‘eds and meds’ (education and medical) aspect that’s intriguing because of the economic strength it gives to the community. The investment by others in downtown, such as the research park, gave us confidence as well.”
Long said his group expects to have 250 employees once its operations are open.
“It’s an incredibly exciting project for us,” Long said. “It’s not about us. We don’t go in with a cookie-cutter approach, plug it in and say ‘Thank you very much.’
“Our goal is to transform this property into a truly vibrant hospitality center, to create a unique and authentic experience for the community and those visiting the community.
Aside from showing the building to potential buyers, Friday was the first time the lobby and exhibition hall had been open since Reynolds formally closed the building in 2009.
It’s easy to see how those street-level areas lend themselves to a hotel lobby, restaurant and bar with the elegant floors and the history of tobacco mural.
Kimpton’s development will feature 175 rooms, 36 suites, a hotel fitness center and more than 6,375 square feet of event and meeting space, including two ballrooms and several meeting rooms on the mezzanine level. It will include a 120-seat restaurant and bar.
Long said the average room rate would be about $170 a night, but would vary depending on the time of the year and local business demand for hotel rooms.
By comparison, in Kimpton’s property in Baltimore, the daily room rates for the next five weeks range from $159 to $529. The rates at its property in Savannah, Ga., range from $186 to $399.
“When we got together and walked the building, we saw how we could create these wonderful apartments and how we could take the space and make a wonderful boutique hotel,” Long said. “We knew then it would be an outstanding project.
“Of all the buildings we have ever looked at an adaptive reuse project, and we have done 15 so far, there has never been a building in as pristine a condition and as well cared for as this building.
“I’m still blown away by it. Frankly, it looks like they’re about to move back into the building.”
When the building opened in 1929, it was a landmark of the industrial South and was the tallest building between Baltimore and Miami. It is known as one of the nation’s best examples of art deco skyscraper architecture. Its design inspired the Empire State Building in New York City.
The buyers appear to have gotten a significant bargain in the deal. The building had been on the market since November 2009, with CBRE Triad as its marketing agent since 2013. It is valued at $12.3 million, according to Forsyth County tax records. The initial asking price was $15 million, according to Greg Wilson, executive vice president for CBRE Triad.
Caplan said the groups were impressed that Reynolds officials “were much more concerned with quality and our ability to execute than they were about getting the best price for this building.”
“This building has been a part of the fabric of this community for so long, and it will serve as the way to tie us into the fabric of the community as well.”
Andrew Gilchrist, president and chief commercial officer of Reynolds, said the sale “is part of our continuing commitment to transformation, not just within our company and our industry, but within our community.”
Joines praised Reynolds officials “for their patience and perseverance in doing things the right way and finding the right new owner. This will fit in perfectly with what is happening in downtown.”