If you drive by 505 W. Chapel Hill Street in Durham, you’ll find broken glass, graffiti, cracked pavement and rusted fixtures.
A development that promised affordable housing, shopping and a boutique hotel has fallen through.
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Thursday, Durham City Council agreed to end its negotiations with the developer, The Peebles Corporation. City officials cited disagreements with how affordable housing should be executed and economic pressures.
According to the city documents, the cost of the project ballooned nearly $100 million from last August to March 2025. That would require the city to contribute $78 million. That’s $17 million more than the initial $61 million.
Developers previously said the first phase of the project was expected to officially start construction in 2026.
Donahue Peebles III, the executive vice president with the development firm, told WRAL he understands the City’s position.
“We’re hopeful that they’re able to find a way to achieve their goals and maximize the public benefit to the site,” Peebles said over the phone. “We remain up and ready to be an additive to the process to the greatest extent we can be, if they seek to find an alternative to move forward.”
City council members are now considering three options:
- Do nothing for now and consider demolition
- Provide interim programming
- Find another company to develop the building itself or affordable housing on the land
Many people in the community urged city leaders to move forward with development, even if it means working with another developer. Most expressed concerns about losing the affordable housing component.
“Pausing this project, we can't do that anymore. It's already been too long that building continues to degrade every day,” said Julianne Patterson, executive director of Preservation Durham, an organization that works to preserve Durham's past and protect the cities future.
Preservation Durham wants to buy the building.
“The historic building itself is on less than one quarter of the four-acre site, and we believe that carving it out on its own parcel and seeking to move forward with redevelopment of that building will solve a lot of problems,” Patterson told WRAL. “Subdividing it from the rest of the parcel will make the remainder of the parcel more attractive to an affordable housing developer to really hit on some of those other state priorities.”
Some city council members seemed open to parceling off the building site in order to preserve it. Others voiced that they wanted to maintain ownership.
By the end of Thursday’s discussion, council members also said a phased approach would be best for the City.
From here, city staff will need to come up with feasible options for the site.