By taking on projects no one else wanted, developer Jim Donnelly is changing the landscape of uptown. And until now, he's done so without anyone blinking an eye
Donnelly, inside Carolina Theatre, intends to turn the space into a multimillion dollar residential tower with an elevator system that would transport cars from the ground floor to garages next to each residence.
(Photo: Donnelly, inside Carolina Theatre, intends to turn the space into a multimillion dollar residential tower with an elevator system that would transport cars from the ground floor to garages next to each residence.)
Jim Donnelly punches in the code on the padlock, pushes open the gate, which is connected to a chain-link fence that surrounds a dilapidated brick building, and walks through. He moves toward the building and unlocks its rusty, heavy wood doors. Cool air rushes out.
It's dark. Really dark. And it smells old. Really old. Donnelly, all five feet nine of him, in red mesh shorts, white T-shirt, and sneakers, jogs down to the bottom of the room, into the dark space ahead.
No sooner do the lights come on than Donnelly cues the sound system. First it's James Taylor—"Carolina In My Mind." No, that's not right. And then, there it is — Phantom of the Opera. How fitting. The music bellows throughout the empty space. No more talk of darkness, forget these wide-eyed fears. … That's all I ask of you …
There's gray in his short hair. A sign of the past three years? The lines of his jaw are strong, but his eyes a soft blue. He points out where the orchestra used to sit, the balcony seating, the curtain still hanging on stage. He waves his hand to the walls where the fire in 1980 took a little of the life out of the eighty-two-year-old Carolina Theatre, dulling its beauty. He walks upstairs — one story, two stories, and then into a dark space where a rusty metal ladder serves as the only way to the top. He climbs up, fifteen, maybe twenty rungs. Promise me that all you say is true …
There, at the top, is the cutout where the projector used to sit when the theater started showing movies fifty-six years ago. Through the hole you can imagine what Donnelly's been describing: the magic and the excitement — Ethyl Barrymore and Elvis performing onstage. It's the same feeling he says he had when he first walked into the building just two years ago, though you wonder if this is how the salesman in him closes the deal, tugging on your heartstrings by painting the picture of what the Carolina Theatre used to be. "This was an escape for people," he says, resting his eyes on the battered stage. "And it still can be." There's no talk of the residential condo project, Encore, the one that will save the theater and restore it so that it can be used again. No, this isn't the time for that. Because all Donnelly sees is something that's broken. And he wants to fix it.
For the past three years, Donnelly has taken uptown buildings that dozens of other developers in and outside Charlotte passed on year after year and he's made them something. There's the McCausland Building (which houses his salon, Emerson Joseph), the Home Federal Savings and Loan Building (which Donnelly converted into seven high-end apartments called The Trust; Chima Brazilian Steakhouse occupies the bottom floors), and Grace AME Zion Church on Brevard (an events facility called Grace Event Center).
But for the first time since he arrived in Charlotte three years ago, without so much as a nod of acknowledgment from many uptown developers, Donnelly is facing the biggest threat to his success. He's on the verge of losing the purchase option for Carolina Theatre, his grandest real estate project yet, which he intends to restore and add on to with a twenty-unit residential tower. And for the first time, the savvy businessman, the outsider with a seemingly magic touch, may fail.
Charlotte was an obvious choice for Donnelly, forty, who already lived and worked in Atlanta. Charlotte was a growing city; there was promise here. After spending five years running multimillion-dollar Internet travel company IgoUgo.com, which he co-founded, he arrived here in 2005 with a mission — to make an impact on the city.
Donnelly immediately saw a hole in the marketplace and, like any entrepreneur, he wanted to fill it. Unlike other major cities, there was no sophisticated, upscale place for a man to go, relax, and get groomed. But he needed the right home for this men's salon, and when he came across the old McCausland Building on the 200 block of Tryon Street, he knew it was the right space. Other developers, including local architect and developer David Furman, had passed on purchasing the property — the parking was an issue, the owner difficult to negotiate with. In came Donnelly, the outsider, the Manhattanite, and he bought the building. "When I heard someone bought the old McCausland Building, I took notice," says Furman. "I was like, 'Who is this guy?' I feel like he came out of thin air."
In 2005, Donnelly and his wife, Stacy — whom he married that same year and has a one-year-old son, Griffin, with — and her sister Shelly opened the city's first men's grooming salon, Emerson Joseph. Right next to the Foundation for the Carolinas. A block from Wachovia's and Bank of America's headquarters. Across the street from power-lunch hot spot McCormick & Schmick's. But Donnelly wanted to do more.
Growing up, Donnelly was an exceptional athlete and student. The moving from school to school, the meeting of new friends, the starting anew with teachers was easy for the outgoing Army brat. Maybe it was the fact that he had instant friends from the sports teams he played on — football, indoor track, baseball. Or maybe he was just a good, likeable guy. Even when he was the new kid, the outsider, everyone accepted him.
Donnelly was and is a doer. He saw what needed to be done and he did it. The family — mom Cheryl a teacher, dad Mike an Army major, younger sister Barbara, and his grandparents — lived together in a four-bedroom home in Hinesville, Georgia, outside Savannah, the last stop of Mike's military career. After long practices for football or baseball or logging miles on the track, Donnelly would work at Wendy's, pick up cigarette butts outside the Huddle House, tutor the Huddle House owner's son to make extra cash, or work summers mowing lawns for his uncle's landscaping business. When it came time to go on his senior cruise, there was no extra money at home. He sold the most raffle tickets — more than his entire senior class combined — which enabled him to go on the trip without spending a dime.
With each new school, each new football squad, each new group of friends to break into, each new challenge, Donnelly was the underdog. On a ROTC scholarship as a freshman at the University of Miami, he was a marketing major. After visiting his girlfriend at the University of Texas at Austin, he transferred. He finished his undergrad degree in three years. Then he received his MBA from the University of Georgia in a year. An overachiever? No, a doer. During grad school, a project introduced him to the world of entrepreneurs. His project, Repeat Performers, was a golf-ball retrieval company, which piqued an investor's interest; Donnelly soon started his first business.
But it would be short lived. Not long after grad school, Donnelly had to fulfill his obligation to Uncle Sam and was sent to Korea, leaving the business in the hands of "a fraud," says Donnelly. The business went under and Donnelly, at just twenty-three, declared bankruptcy. "I knew I had a lot to learn when I got out of the Army," he says. "I knew I needed to learn more to become a successful businessman."
Stints at Kraft Foods working on the JELL-O account ("to learn the marketing of a major product"), BellSouth ("to learn about technology"), Coca-Cola ("to learn about international branding"), and Citibank ("to learn about Internet marketing") would follow.
On his first day at Citibank in New York City, a hot July day, he met Tony Cheng, a Harvard MBA who would become his first partner. The two immediately hit it off, and no sooner had they begun working for Citibank than they were already talking about creating something new, something no one else had thought of. It was 1998, and "everyone had an idiotic idea," says Cheng, who is now CEO of Tripfilms.com. It was the beginning of the end of the dot-com boom, but they pushed on. They thought of creating an automated Web site for a local bakery. Software to help a dental office sort through patients. But it was Donnelly who thought about what was missing in the travel industry. Sure, there were sites to search for flights or guidebooks available online. But there was nothing from real people. No way for them to share their personal stories of travel with others. "Jim's idea was to bring everybody together," says Cheng. "He didn't appeal to logic, but he tugged on the heartstrings. People were missing the point that travelers feel something."
IgoUgo.com was an overwhelming success. After eighteen months living in New York City, after quitting their gigs at Citibank, after investing $75,000 from each of their savings, and after working long, often sixteen-plus-hour days, Cheng and Donnelly made their Internet dream a reality. From 2000 to 2005 IgoUgo grew from a two-man show to a thirty-person entity. In 2005, Sabre Holdings, which also owns Travelocity, purchased IgoUgo.com for an undisclosed sum (one industry blogger believes the figure was in the mid-seven figures).
Cheng threw himself into his next project — Tripfilms.com — and asked Donnelly to be his partner once again. Donnelly declined. "He wanted to do something entirely different," says Cheng. "He doesn't rest on his past success. I'm not surprised he's tackling projects that aren't a sure thing [in Charlotte]. The most improbable was IgoUgo. No one was succeeding then. But we did.
"Few people have the courage to do their own thing," he adds. "Because it's a lot harder to try and invent something new."
When Donnelly first saw the Home Federal Savings and Loan building at 130 South Tryon, it had stood empty for nearly eight years. Like the McCausland Building, developers had looked at the space, loved the location, but passed after realizing the obstacles, namely parking availability and the structure's historic nature, which meant restrictions on what could be done to the property. But Donnelly saw promise.
While other developers saw the building as solely a place to build a thirty-story residential complex, Donnelly and the Pursuit Group solved the problem by creating The Trust after the group purchased the building for $6.5 million in 2007. It would turn into a seven-story building with eight residences starting at $1.55 million. The eighteen parking spaces available? Those were for the residents only. Problem fixed.
Next was the Grace Event Center on South Brevard Street. Another potential problem site; another project Donnelly saw the potential in — and something to fix. Originally Grace AME Zion Church, the historic building and property sat vacant for roughly forty years. The Historic Landmarks Commission in Charlotte owned the property after saving it from being razed in 2006. Developers came and went—their aspirations and visions for the property too loud, too complicated, too much. Then came Donnelly.
"Most developers wouldn't touch these projects because of the creativity and the solutions you need to make it work," says Matt Benson, chairman of the design review committee for the Historic Landmarks Commission. "Jim's idea wasn't as complicated as some of the others. They're not easy projects to work on but they're good for the city as a whole."
Donnelly's vision was simple: save and restore the church and turn it into a venue for weddings, parties, and events. Then eventually turn the remaining property into affordable urban day care.
Three successes, in such short time. All by an outsider whose name, when mentioned in the tight-knit circles in Myers Park, Eastover, Foxcroft, prompts puzzled looks and questions of who he is and what's he doing that's so important, anyway. While others, those in uptown, those concerned with uptown development, are beginning to take hard notice.
"When I first walked in here I knew I had to have this project," Donnelly says of the Carolina Theatre. "I do things because I get a visceral feel from them. When I walked into each of these projects, I just knew within ten minutes of being there that I had to do it."
Donnelly slowly walks through the rest of the theater, pointing out where there were couches and bars set up for the 400-plus-person New Year's Eve party he threw here in 2008 to raise money to save the damaged building. Phantom of the Opera continues to echo throughout the hall. He walks up to the upper balcony, where the view is the best in the house. Behind the blackened walls and the rust, there's the skeleton of a former theater once full of life.
Carolina Theatre was one of Donnelly's next projects after The Trust and Grace Event Center. The other was CORE Fitness, formerly the Crown Athletic Club. The Pursuit Group purchased it for an undisclosed amount and conducted a $2 million renovation in five weeks, a feat Donnelly is most proud of. The historic Carolina Theatre "sat vacant for so long because it's a really difficult project," says Michael Smith, president and CEO of Charlotte Center City Partners. "So many looked at it and walked away." David Furman, Afshin Ghazi, and many other developers in and outside Charlotte looked at the property and passed. "Jim's a visionary," says Chris Trainor, a Pursuit Group partner. "He can create something out of nothing. Do more with less."
Instead of the towering hotels or massive residential projects proposed for the space by other developers, Donnelly chose to scale back, just as he did with The Trust. The proposal includes a twenty-unit residential tower with condos priced from $1.8 million to $5 million, with an elevator system that would transport cars from the ground floor to garages next to each residence, which would solve the parking problem and save much of the historic theater. The city liked that and gave the Pursuit Group the contract to develop the property, with the understanding that they will receive a grant strictly for the restoration of the theater based on 90 percent of the new property taxes generated from the project.
The project is unlike anything Charlotte or many other cities outside of Manhattan have seen. An elevator for cars? "We try to do different things," Donnelly says. "Not the next big thing. But something. I want to bring things to Charlotte that make people say, 'That project is so cool. And it's in Charlotte?' "
But the financial meltdown soured lenders, and getting financing for the Carolina Theatre and Encore has proved difficult. Sources who chose to remain off the record don't see the project happening now or ever. Others believe if the financing comes through, after the city has granted the Pursuit Group its sixth extension, until July 17, to secure $1 million to buy the project (in addition to the $2 million the group already invested), Encore will happen.
"Encore is a great project," says Furman. "If you're a creative thinker, you figure this stuff out. The idea is everything. That's where the real brilliance is." Says Smith: "You need people like Jim in a market that's going to achieve great things. You need to have people who are willing to face these odds."
For the first time in a long time, Donnelly is having trouble fixing the problem — the money problem. "I'm an eternal optimist. We're gonna make this happen," he says. "When you fail, sometimes you end up the bad guy. What's sad is that if you fail, people will say you haven't tried hard enough. And it's like, come on. We may lose our personal fortunes here."
Donnelly walks down the stairs to the first level of the theater. He jogs down again to turn off the music and quickly runs back. He opens the heavy wooden doors, and bright light seeps in.
"I often think, why does it have to be a guy who's lived here for three years to see that this stuff needs to be here?" he says.
"If we pull this off, we'll be the gods of real estate."
Blake Miller is senior editor of this magazine. E-mail: email@example.com