The Hedge Maze

September 30, 2020

You only have to glance at the 27-story One City Center and dozens of new condo complexes to see that Durham has entered a new phase of development that few would have predicted at the turn of the millennium. But the powers behind those changes—the developers that fund and profit from gentrification—are much harder to see, despite the immense control they wield over the city’s future.

Their influence is only likely to grow. An analysis of property ownership records from the past 20 years shows that the new powerbrokers are increasingly large investment firms based outside of North Carolina, and the city has little power to regulate their influence.

In 2000, 65 percent of the land in Durham that is used for commercial purposes—including offices, restaurants, and other businesses, as well as apartment buildings—had an owner that lived in North Carolina, according to the contact address listed on the deed. More than a third lived in Durham itself.

But today, more than half of those commercial properties have an out-of-state owner. Less than a quarter have an owner in Durham. The trend is particularly stark with apartment buildings: Around 75 percent of the city’s apartment units have an owner based outside of North Carolina.

Though the trend isn’t visible in residential properties like condominiums and single-family homes—only 3 percent of residential land has an out-of-state owner in 2020—that doesn’t account for the role developers have played in which homes are built.

Individual out-of-state developers like Virginia’s McCann Realty Partners and Ohio’s Epcon Communities own hundreds of units at a time, so their influence remains long after ownership has changed hands. And corporate companies renting single-family homes are a growing force in the market: California’s American Homes 4 Rent owns over 200 houses in Durham.

“It influences our ability to create our own future as a city,” Durham Mayor Steve Schewel says. “Every dollar that goes to an outside corporation is a dollar that leaves Durham.”

For the new investors, that’s by design. Many of them, especially for apartment buildings and other residential complexes, are large national or international hedge funds and property-management firms, with dozens of holdings, in search of attractive new markets. In turning to Durham, they’re changing the makeup of the city.

Read the rest at Indy Week.