Heartbreak hotel: It’s almost time for last checkout at iconic Concord property

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When Allen Craven’s father moved to the city of Concord, Hotel Concord was his home for months.

It was around the 1950s, and Craven’s dad, who has since died, lived there while setting up a medical practice across the street.

“He paid $3.50 a week for a furnished room, and that included breakfast, dinner and maid service,” Craven said.

Now, the hotel is about to serve its last guest.

After operating for nearly a century, the roughly 100-room hotel will take all of its rooms off the market Oct. 31.

In the heart of Concord’s downtown, the hotel is home to about 40 residents who will be evicted, said Craven, president of Union Street Corp., which owns the hotel.

Craven said the combination of a down economy and an unsustainable business model — the rent wasn’t enough to pay for expenses — are to blame for the demise of the residential part of the hotel.

Union Street Corp., at least for now, will continue to rent out the building’s mezzanine and ballroom for events, said Craven, who is also owner of Craven and Co., a Concord-based commercial and residential real estate brokerage firm.

But what lies in store for the building is largely unknown, as Union Street Corp. could sell it.

There was a spark of hope for the old hotel a few years ago when an investor submitted a master plan to redevelop not just the hotel but the entire block, Craven said. But the investor abandoned the project when the economy tanked, Craven said.

The closing of the guest rooms at the hotel is just the latest blow to a once-thriving city.

Concord is the largest city in Cabarrus County and the county seat, with a population of about 80,000, according to the U.S. Census Bureau.

The city was still recovering from the demise of the textile industry — most of the mills in the area shut down in the late 1990s and early 2000s — when, in 2009, a Philip Morris plant closed.

At its peak, the cigarette plant, which opened in 1981, had about 2,000 employees, said Jim Ramsure, a Concord native and city councilman since 1995.

“The plant paid about $3 million a year in city property taxes and almost $2 million a year for water,” he said. “When it closed, it was a big blow.”

Some of the plants workers moved to Richmond, Va., where Philip Morris’ parent company, Altria, consolidated its operations. Others found jobs in the motorsports industry — Concord is home to Charlotte Motor Speedway and more than a dozen professional race teams — while still others found local retail jobs, including at Concord Mills mall, although jobs in both industries are down, Ramsure said.

There are emerging industries in Concord, such as Connextions, a health care call center that announced in April it’s adding 400 jobs, as well as Celgard, an electrical vehicle manufacturer that completed a new 150,000-square-foot plant in Concord’s International Business Park this year.

But even with those new industries, the real estate and construction sector has been battered by the economic downturn and the loss of the Philip Morris plant.

“There hasn’t exactly been a floodgate of new opportunities,” Ramsure said. “Construction is way down, and we’ve had a fair amount of foreclosures, and those hurt property tax collections.”

Craven said Craven and Co. has gone from doing $130 million in business a year before the Great Recession to $30 million.

“Where we used to primarily deal with high-end properties, now about 40 percent of our business is in foreclosures,” he said.

Like Hotel Concord, much of Concord’s woes are on display in the downtown area.

The hotel, which opened in the early 1920s, was once a popular gathering place for the community, Craven said.

When it was put up for sale in the 1960s, Craven said, about 200 local residents, including his father, formed Union Street Corp. and bought it to make sure it wasn’t demolished.

Craven took over as president of Union Street Corp. about 15 years ago. The corporation continued to run the hotel, offering affordable prices for rooms, which currently cost $375 a month for a one-room unit and $450 for a two-room furnished apartment.

But with escalating utility, labor and insurance costs, the revenue from rents no longer covered operating costs.

The solution wasn’t as simple as raising rents, Craven said, pointing out that the rooms are old and the hotel needs upgrades, something the corporation can’t afford.

The corporation will continue to rent out the hotel’s ballroom and mezzanine, but Craven said he’s also considering selling the property. The buyer would have to agree to preserve the ballroom and mezzanine, though, he said.

“Our plans are still the same when the corporation first formed: to keep the building as a community asset,” he said.

But complicating the matter is that the four-story hotel was built on top of a building now owned by Fifth Third Bank, which is trying to sell the vacant property and the parking lot behind the hotel.

“The two buildings are joined, so it will be very difficult for the bank to sell its property without the hotel being part of the transaction,” Craven said. “It definitely creates some hardships.”

Craven said the entire city block in which the hotel sits needs redevelopment. Along the same street as the hotel are three buildings that were recently saved this summer from going into foreclosure by the lender, Hillsboro, Ore.-based StanCorp Mortgage Investors.

Abu-Baker Senge, a commercial mortgage loan analyst with StanCorp, said Jordan Brown Properties was the previous owner of the properties. StanCorp took the properties in July through a process called deed in lieu of foreclosure.

“Instead of foreclosing, and having that hit the borrower’s credit, the borrower just handed over the deed to us,” Senge said.

He said StanCorp hired Charlotte-based Percival McGuire in September to try to lease the vacant spaces, all of which are three-story buildings at 11 Union St. South, 9 Union St. North and 17-21 Union St. North.

“Ideally, we want to the sell the property,” Senge said. “We’re not in the business of holding property as equity.”

Patrick McGrath, a commercial broker with Percival McGuire, said the three buildings, all built in the early 1900s, have a mix of office and retail space, and each one is about 40 percent occupied. Asking rents are $8 to $11 per square foot for office space and $12 to $14 per square foot for retail space. McGrath said Percival is talking to potential tenants who have expressed interest in office and restaurant spaces, but no leases have been signed.

“Downtown Concord has had its ups and downs, and we’re trying to bring the area back to life,” he said.

So is Diane Young, who took over as executive director of Concord Downtown Development Corp. about a year ago. Young said downtown has a little less than 1 million square feet of available space, with a vacancy rate of approximately 11 percent.

Between July 2010 and June 2011, nine new businesses opened downtown, she said.

But at the same time, two prominent downtown buildings are in foreclosure.

One, at 14 Cabarrus Ave. East, went into foreclosure this summer. The 2,366-square-foot structure is vacant. The other building, at 70-82 Union St. South, went into foreclosure last year. It’s 22,395 square feet, about a third of which is occupied, Young said.

“I’m pleased we haven’t seen more businesses close over the past few years,” she said. “Downtowns have been fighting back ever since big malls started opening in the 1960s. Whenever the economy gets tough, downtowns get put under microscope. But I think we’re making great strides.”

Craven, though, says Concord’s got a ways to go before it recovers.

“I grew up in Concord,” he said, “and it’s not the same city it once was.”

Boykin can be reached at [email protected].