Adaptive Reuse Models: Dorothea Dix Park Phase II Buildings By Anna Gustines A paper submitted to the faculty of the University of North Carolina at Chapel Hill in partial fulfillment of the requirements for the degree Master of City and Regional Planning April 8, 2021 Phase II Buildings This paper and accompanying appendices represents work done by a UNC-Chapel Hill Master of City and Regional Planning student. It is not a formal report of the Department of City and Regional Planning, nor is it the work of the department’s faculty. Table of Contents Abstract .............................................................................................................................................4 Introduction .......................................................................................................................................5 Project Outline ...............................................................................................................................5 Part I: Literature Review.....................................................................................................................7 Dix Park Planning Documents .........................................................................................................7 Adaptive Reuse Literature ..............................................................................................................7 Adaptive Reuse Feasibility Studies ....................................................................................................................... 8 Privately Owned Public Spaces .......................................................................................................8 Ground Leases ...............................................................................................................................8 Elements of Ground Leases .................................................................................................................................. 9 Summary of Ground Lease Risks and Benefits ................................................................................................... 11 Part II: Peer Park Case Studies .......................................................................................................... 12 Balboa Park and Mission Bay Park, San Diego ............................................................................... 12 Balboa Park ................................................................................................................................. 13 Inspiration Point ................................................................................................................................................. 14 Timken Museum Lease ...................................................................................................................................... 15 Mission Bay Park .......................................................................................................................... 16 Key Lessons: Comparing Balboa Park and Mission Bay Park.............................................................................. 18 Exposition Park, Los Angeles ........................................................................................................ 19 Los Angeles Memorial Coliseum and Former Los Angeles Sports Arena ........................................................... 20 The Natural History Museum ............................................................................................................................. 20 The Lucas Museum of Narrative Art .................................................................................................................. 21 Key Lessons ........................................................................................................................................................ 22 The Presidio, San Francisco .......................................................................................................... 22 Leasing Structure ............................................................................................................................................... 22 Key Lessons ........................................................................................................................................................ 23 Brooklyn Bridge Park, Brooklyn .................................................................................................... 24 One Brooklyn Bridge Park .................................................................................................................................. 24 Empire Stores ..................................................................................................................................................... 25 St. Ann’s Warehouse .......................................................................................................................................... 25 Key Lessons ........................................................................................................................................................ 26 Case Study Conclusions and Application to Dix Park ...................................................................... 26 Part III: Market Analysis and Scenario Modeling ............................................................................... 28 2 Market Analysis ........................................................................................................................... 28 Retail .................................................................................................................................................................. 29 Office .................................................................................................................................................................. 30 Housing .............................................................................................................................................................. 30 Museum/Performing Arts .................................................................................................................................. 32 Market Analysis Conclusions .............................................................................................................................. 34 Scenario Modeling ....................................................................................................................... 35 Selecting a Building to Model Scenarios ............................................................................................................ 36 The Brown Building ............................................................................................................................................ 38 Proforma Results and Discussion of Alternatives ........................................................................... 39 Scenario 1: Private Development of a Food Hall ................................................................................................ 40 Scenario 2: Quasi-Public Development of a Museum ........................................................................................ 42 Scenario 3: Public Development of Nonprofit Offices ....................................................................................... 43 Conclusion and Recommendations for Dorothea Dix Park ................................................................. 45 Attached Appendices ....................................................................................................................... 47 Bibliography .................................................................................................................................... 48 3 Abstract This project explores mechanisms for the adaptive reuse of Dorothea Dix Park buildings that balance revenue generation with other park goals, such as the provision of public benefits, the long-term maintenance of historic structures, and park activation, and compares the financial impact of private, quasi-public, and public use options in an example building. Part I of the report is a literature review of existing Dix Park planning documents, adaptive reuse projects, public use of private space (POPS), and ground leases. Part II examines how real estate assets are utilized in five peer parks – Balboa Park and Mission Bay Park in San Diego, Exposition Park in Los Angeles, The Presidio in San Francisco, and Brooklyn Bridge Park in New York – and identifies applicable leasing mechanisms for Dix Park. Finally, Part III delivers a high-level market study of private and quasi-public uses in the local area, and financial models for three program alternatives. This project ultimately finds that multiple leasing structures and use types are viable at the park, and Dix Park should consider combining strategies in order to recruit a diverse mix of park tenants and balance revenue generation with other park goals. 4 Introduction Dorothea Dix Park is a 308-acre downtown campus acquired by the City of Raleigh in 2015. The campus formerly served as the state’s mental hospital and is still occupied by the state Department for Health and Human Services under a leaseback agreement with the city. Over the coming decades, the city plans to redevelop the campus into a destination urban park that opens up and connects the park to the city, builds on the physical materials, stories, and experiences that have existed at the site for over a