TO:                Mayor and Town Council


FROM:          W. Calvin Horton, Town Manager


SUBJECT:     Public Forum: Market Analysis Report for Proposed Development of Town Parking Lots 2 and 5


DATE:           March 22, 2004



The Town Council called tonight’s Public Forum to receive public comment on the attached Market Analysis Report commissioned by the Council as part of its consideration of the future development of Parking Lots 2 and 5 in downtown Chapel Hill (please see Attachment 1). The report, which identifies potential uses for the sites which the market could support, is intended to help the Council decide whether to continue with the next phase of the process – development of master conceptual plans for the sites.




On October 27, 2003, the Council authorized the Manager to contract with Stainback Public/Private Real Estate LLC (SPPRE) to provide economic development consultant services for the development of Parking Lots 2 and 5. The Council has budgeted $155,000 for the first two phases of the project as outlined in the contract scope of work – the development of a market demand study followed by the development of conceptual master plans (please see Attachment 2). The Council has the option of deciding whether to proceed after each phase.


The market demand study was developed by Economics Research Associates (ERA), a national economic analysis consulting firm with offices in several cities, including New York City and Washington, D.C. ERA produced the report as a subcontractor of Stainback Public/Private Real Estate.


The Council Committee on Lots 2 and 5 has met several times to discuss the market demand study and has reviewed earlier drafts of the report.


On November 21, 2003, the Committee recommended adding to the market study scope of work an evaluation of market demand for entertainment uses and a downtown assessment, including case studies of similar communities. The arts and entertainment uses cited by the Committee related to books, the arts, music, food, gathering places, and performance space/ theater. On November 27, 2003, the Council authorized increasing the market study budget to $55,000 in order to include the evaluation of market demand for arts and entertainment and the downtown assessment.


On December 8, 2003, the Council Committee on Lots 2 and 5 began discussing issues to be addressed in the report. Committee members commented that the study should account for the Arts Common project planned by the University, identify the positive and negative impacts on businesses in Chapel Hill and Carrboro that could result from the development of the two parking lots. Committee members stressed the importance of including affordable housing and the need to capture the uniqueness of Chapel Hill in the study.


On December 16, 2003, the Council Committee met with Patrick Phillips, president, and Shuprotim Bhaumik, senior associate, to discuss the market study. Committee members gave input to the consultants on the process and approach to the study.  Discussion included the elements of the community that make the Town distinctive, the desire to include affordable housing, suggestions for including the University, and the need to pay attention to neighborhoods around downtown.


On January 29, 2004, ERA submitted an interim report describing the firm’s initial findings, including the recommendation not to include a detailed analysis of demand for office space in the final report. Council Committee members provided comments on the report.


On February 29, 2004, ERA submitted a more detailed draft report containing an analysis of demand for retail, residential and cinema uses. At the Council Committee’s meeting on March 1, Committee members provided feedback, including stressing the need to expand the discussion of the demand for arts and entertainment uses. Committee members also made suggestions on the organization of the report and asked questions seeking clarification on the use of data and other items.


ERA’s complete draft report is attached to this memorandum.


The Council Committee on Lots 2 and 5 is meeting at 5:30 p.m. prior to tonight’s forum to discuss the report with ERA and John Stainback, managing partner of Stainback Public/Private Real Estate. Mr. Stainback will present the report to the Council as part of the Public Forum.


Public Notice


The Town advertised tonight’s forum in the Chapel Hill Herald on Wednesday, March 17, 2004. We also have e-mailed the announcement to the Downtown Commission, the Chamber of Commerce, and other interested citizens. The report can be downloaded from the Planning Department’s Downtown Chapel Hill Development Initiative website.




The purpose of the Market Analysis Report is to quantify demand for non-residential and residential space that the Chapel Hill area market could support over the next few years.  The market study will help the Council determine whether and how to proceed with the next step – development of conceptual master plans based on a recommended building program. The market study’s findings would be a factor in determining a building program; the program also would reflect the Council’s objectives for the development that are not necessarily market-driven, such as the provision of public space.


ERA’s findings are intended to provide a basis for assessing the economic climate of Chapel Hill and the region, including data on demographics of the region, vacancy rates, planned development projects and projects under construction. ERA’s research included interviewing key area contacts such as real estate brokers, developers, business owners, investors, University officials, and the arts community.


The report also contains a downtown assessment section that includes case studies of downtowns in seven communities similar to Chapel Hill in terms of population, relationship to the greater metropolitan area, and affiliation with a major university.




Comments from the Public Forum would be considered by the consultants prior to their submittal of a final report to the Council. The project schedule (see Attachment 2) calls for the Council to consider accepting the Market Analysis Report at a meeting after tonight’s forum. At the same meeting, the Council is to consider authorizing proceeding with the development of conceptual master plans for the sites based on the recommended building program (see Attachment 3).


We will work with the Council Committee on Lots 2 and 5 to revise the project schedule; at this point the project is about six weeks behind the original schedule.


If the Council desires, these items would be scheduled for a Council Committee on Lots 2 and 5 meeting on April 14, 2004, followed by consideration of the full Council at its regular business meeting of April 14.




We recommend the Council refer comments from tonight’s forum to the Manager for consideration in a final report to be presented at the Council’s April 14, 2004 meeting. At that time, the Council also would consider whether to proceed with developing conceptual master plans for the sites.




  1. Market Analysis Report by Economics Research Associates (begin new page 1).
  2. Exhibit B: Detailed Timeline Schedule (from contract with Stainback Public/Private (Real Estate) (p. 2.1).
  3. Excerpt from Exhibit A: Work Statement (from contract with Stainback Public/Private Real Estate) (p. 3.1).