Wednesday, June 12, 2024

Remaking Winston-Salem

Slowly, the afternoon shadow of the old brick chimney with its terse “R.J.R. Tob. Co.” overtakes the young woman. As if steeled for the chaos the medical student will one day face treating patients in an emergency room, Jennifer Taylor is unruffled by chattering jackhammers across North Patterson Street.

Poring over notes at a table outside Café Brioche Dorée, she’s surrounded by buildings like hers, 525@Vine. In her early 20s, she came east to attend one of the nation’s 10 best physician-assistant schools at Wake Forest School of Medicine. “Now, I’m in the midst of hundreds of like-minded people.”Around her are more than a dozen former factories, most with reflective windows, skylights and bright interior atriums, where medical, university and community-college students, researchers, biotechnology technicians, business executives and staffers work and study. “You really feel like you’re part of all this.”

Fifty-five years ago, the same chimney cast its shadow over Harold Bledsoe. He’s 73 now, busy in his woodworking shop across town, but he was 18 then. His first job was cataloging incoming hogsheads, huge wooden barrels packed with tobacco from farms in the Carolinas and Virginia. In 1962, $1.59 an hour was good money. “I’d been making $1 an hour in a grocery store.”

Late in the day, as the sun ducked behind the chimney, he and thousands of others would head home, their khakis and overalls — like the city itself — infused with the pleasant, toasty aroma of cured tobacco.

Jennifer Taylor and Harold Bledsoe are different generations of Winston-Salem, a city undergoing a metamorphosis that may be unparalleled in North Carolina for magnitude, drama and audacity. Once called Camel City after the cigarettes made by the billions in factories here, it played itself in Barbarians at the Gate, the dark 1990s depiction of Wall Street  avarice and painful corporate relocation. Now, it has a new pulse.

Its heart is this, the hulking R.J. Reynolds Tobacco Co. industrial complex begun in 1875 and once one of the world’s largest cigarette factory complexes, now known as Wake Forest Innovation Quarter. It covers 145 acres and represents more than $700 million in public and private investment that has created 2.8 million square feet of space for about 70 technical and service companies and five academic institutions. Unlike North Carolina’s crown research-park jewel, the 7,000-acre Research Triangle Park, this is an intentionally gritty, walkable, human-scale enclave that proudly displays its past, even if checkered. Durham and other Tar Heel tobacco towns have changed too, but not as dramatically as this, the state’s fifth-largest city with more than 240,000 people.

The remaking of Winston-Salem into an apex of biomedical research, education and technology is propelled by Wake Forest University and Wake Forest Baptist Medical Center and School of Medicine. They have pumped hundreds of millions of dollars into these old factories. Along with the city, state and a private Maryland-based company, developer Wexford Science & Technology LLC, the consortium is challenging the traditional suburban office-park model.

“That’s significant because Wake Forest University is a beautiful, pastoral suburban campus,” says President Nathan Hatch. “Now, we can combine that with an urban, edgy, dynamic campus downtown.” Wake opened its first satellite campus in Innovation Quarter in January and plans to house 350 biomedical science and engineering students there. “It’ll greatly enhance the experience of students who want both,” Hatch says.

“Historically Winston-Salem has been a difficult place to recruit to,”says John McConnell, CEO of Wake Forest Baptist Medical Center, the region’s biggest employer. He also oversees the medical school. “We now compete with Harvard, MIT and UC Berkeley for talent.”

Transformation hasn’t been painless. Some ask if Innovation Quarter is creating jobs or merely shuffling them, and why historically black Winston-Salem State University doesn’t play a bigger role. At times in the last two decades, it even appeared Innovation Quarter would be just another Winston-Salem disappointment.

But it has survived as the latest iteration of an irony that haunts North Carolina. Winston-Salem owes a fair share of its existence — universities, banks, hospitals and all — to the tobacco farms and factories that in the last half-century became regarded as purveyors of the ultimate health evil.

“R.J. Reynolds built so much stuff here that we have kind of a romantic history,” says 36-year-old bartender Anthony Lowe as after-work glasses clink at Krankies on the fringe of Innovation Quarter. A native, he’s a graduate of R.J. Reynolds High School. “Does my family have direct ties to RJR?” he asks rhetorically. “You might say that. My dad was a physician.”

Indeed, Innovation Quarter exists because of R.J. Reynolds. Each time the company shed jobs and real estate that contributed to Winston-Salem’s despair, it turned around and sold the remains cheap or donated them, contributing to the city’s rebirth. Along with tax benefits and operating efficiencies, unspoken atonement may have been a motivator.

At the 7,699-student Wake Forest University north of downtown — land donated by R.J. Reynolds and the family’s related entities — Hatch calls it a wonderful irony: “What once was considered dangerous is now bringing life to many.”


[/media-credit] Winston-Salem’s two key change agents are relative newcomers. Nathan Hatch, left, has led Wake Forest University since 2005 after holding the No. 2 post at Notre Dame. John McConnell joined Wake Forest Baptist Medical Center as CEO in 2008. He plans to step down from that role this year to become executive director of Wake Forest Healthcare Ventures.

Historically, in the words of a former mayor, Winston-Salem had been “like a baby in the womb”of R.J. Reynolds. In 1976, when Gayle Anderson arrived, the company was ensconced in its 21-story, 1929 art deco skyscraper on East Fourth Street, overlooking the venerable factory complex just down the hill to the east. Wachovia was among the state’s largest banks. McLean Trucking Co., with 11,000 employees, was one of the nation’s biggest haulers. About 4,000 AT&T workers made telephone circuits. Hanes, the world’s largest hosiery and underwear maker, spun and sewed full force.

“It was mainly a tobacco, textiles and banking town, and the top five employers ran the show,” says Anderson, who worked at Reynolds for 11 years, was a partner in a public-relations firm for two, and joined the Winston-Salem Chamber of Commerce as a vice president in 1989. She’s been president since 1996. “They were generous, philanthropic. It was an 8-to-5 town and by 5:30, nothing was going on, but people were OK with that.”

Ghosts remain. Though the old headquarters now houses an upscale Kimpton Hotel and apartments, in the early hours of a drizzly weekday morning, downtown is deserted but for an occasional police car. Traffic signals, set to blink yellow in all directions, shimmer on wet, empty streets. When Anderson arrived at Reynolds, there were already signals, too, of the economic pain ahead, but few saw them. “Then our whole world changed.”

It had started changing years before. In 1961, Reynolds began relocating downtown manufacturing, first to a midtown plant and later to Tobaccoville in rural Forsyth County. With smoking lawsuits mounting, Reynolds sought diversification in the 1985 acquisition of Nabisco Brands, maker of Oreo cookies and Ritz crackers. Ross Johnson, who died in December at 85, encamped as CEO of RJR Nabisco and soon branded Winston-Salem as “bucolic,”code speak for “hick.” He moved its headquarters to suburban Atlanta in 1987.

AT&T started shutting down in 1988, laying off 3,300 workers by 1990. McLean had declared bankruptcy in 1986, the year Reynolds opened in Tobaccoville, closing four downtown plants. Computerized machines replaced workers by the thousands and, within a year, the company slashed 2,300 jobs. By 1989, it had cut another 2,300. Fewer than 3,000 remained downtown, about one-fourth of its peak. Reynolds American Inc. spokesman David Howard says the company, which is being acquired by British American Tobacco for $49.4 billion, now employs 5,400 nationwide, but he declines to say how many in North Carolina. Kirk Ericson, a Forsyth County planner, estimates the plant employs 1,000 to 2,000.

Already on the ropes, Winston-Salem was ill-prepared for another emotional blow. Tom Davis in 1940 had bought Camel City Aviation, renamed it Piedmont Airlines, and by the 1980s, built it into a carrier with 22,000 employees systemwide. The carrier inspired fierce passenger loyalty and adoration in its hometown, even after moving its main hub to Charlotte in 1981. In 1987, it was sold to Pittsburgh-based USAir — later, US Airways, now part of American Airlines — eventually costing Winston-Salem about 5,100 well-paying headquarters and maintenance jobs.

Then, in 1990, the coal-fired boilers at Bailey Power Plant, with the  iconic R.J.R. Tob. Co. smokestack, were extinguished, and the last downtown factory fell silent. Certainly, nothing else could go wrong.

But it did. More than 100 years earlier, Richard Joshua Reynolds needed a bank to hold profits from his new factories, and in 1879, Wachovia Bank was chartered. It was still prospering in 1995 when construction started on its 34-story headquarters designed by César Pelli. The domed tower became Winston-Salem’s proud new symbol.

In 2001, First Union Corp. acquired Wachovia and moved its headquarters to Charlotte, costing Winston-Salem about 1,000 of its 4,000 jobs there, plus invaluable prestige. As the new millennium dawned, Winston-Salem awoke by some estimates with 10,000 to 20,000 fewer jobs than two decades earlier.

“A city can do one of two things,” Mayor Allen Joines says. “It can lie back and take it. Or it can restructure and repurpose itself for future growth with information technology, biotechnology, analytics, advanced manufacturing. That’s what we did.”


From the beginning, Wake Forest University, Wake Forest Baptist Medical Center and the medical school were pivotal, either as owners or catalysts. Not apparent at the time, the loss of RJR Nabisco headquarters had a silver lining. In 1987, the departing company donated its 500,000-square-foot, stacked-cube building near Wake Forest’s suburban campus — then valued at $40 million — to the university, breaking the ice with a concept: Instead of smashing empty buildings, find a new purpose.

“In 1989, when I got to the chamber, the community had gone through announcement after announcement of corporate relocations, downsizings, you name it,” Anderson says. She and Douglas Maynard, chairman of the medical school’s radiology department, lobbied for a research park patterned after Research Triangle Park.

They asked a consultant for advice. “He said, ‘You’re crazy as hell. It’ll never work,’” Anderson says. But he did a study nevertheless, concluding that 80% of the area’s intellectual capital was at the medical school. “He said we should start something that had the potential to commercialize that research.”

Wake Forest Baptist took the lead, paying $1 million for one factory, then investing $6 million to house its pharmacology and physiology departments. Reynolds began donating others, and Piedmont Triad Research Park took shape. Then, disaster hit again, though, like before, misfortune had a silver lining.

In August 1998, a welder’s torch ignited a blaze that consumed most of four former Reynolds factories, one dating to 1910. Says Ericson, the Forsyth planner, “It caused people to say, ‘We’ve got this big hole now, what are we going to put in it? How do we fill it and others?’”

One answer was to recruit a superstar researcher. In 2004, Wake Forest lured a Peruvian-born urologist from Harvard University who was creating human organs from scratch using a patient’s own cells. Tony Atala, whose Wake Forest Institute for Regenerative Medicine now occupies most of a 180,000-square-foot Innovation Quarter building, brought international attention. Winston-Salem’s repurposing suddenly made global medical-research maps.

It wasn’t the first time Innovation Quarter had a hit on its hands. Targacept Inc., a Reynolds spinoff seeking drugs to treat nervous-system disorders by targeting nicotine receptors, moved here in 2000. The concept faltered, and Targacept was sold to Catalyst Biosciences Inc. of San Francisco in 2015. “Biotechnology has big rewards if it works but a high risk of failure,” McConnell says. “That’s why we’re trying to strike a balance between classic biotech and development of medical devices, which is a little less risky.”

Asinex Corp. is a Moscow-based biotechnology company here since 2003. Ocular Systems Inc., which makes surgical devices for corneal transplants, came in 2004. It is now owned by a Seattle-based company. KeraNetics LLC, formed in 2008 and spun off by Atala’s regenerative medicine institute, creates keratin-based products for trauma care.

Innovation Quarter’s biggest tenant, Inmar Inc., has nothing to do with bioscience. It does retail analytics: Who buys what, why, and how do coupons affect their purchases? The company brought more than 900 of its 4,000 nationwide employees to its headquarters here in 2012.

Between Targacept’s opening in 2000 and 2013, when Forsyth Technical Community College launched a $7 million, 24,000-square-foot project to train 1,200 students a year, Innovation Quarter added more than a half-dozen repurposed buildings, a five-story parking deck and dozens of other features.

“I remember walking through one of the buildings that was completely dilapidated, and it seemed like it should see the wrecking ball,” Hatch says. That building became Innovation Quarter’s flagship, Wake Forest Biotech Place, with 240,000 square feet of labs and other space, completed in 2012 at a cost of $106 million.

McConnell had a similar reaction. “When I walked through it about the first week of November in 2008, I was told the building had been donated to us by R.J. Reynolds and we were going to turn it into Wake Forest Biotech Place,” he says. “I was stepping into that gooey tobacco residue still on the floor. I actually said, ‘You have got to be kidding me.’”

Today, Marketing Director James Patterson punches a button and steps into a glass-walled elevator that glides down four stories to the floor of a bright, interior atrium. Such atriums were common in early factories, along with tall ceilings and large, arched windows built when electric lighting was still poor. They fit modern needs surprisingly well.

The medical school and others had deep pockets, but costs of bringing the buildings up to modern aesthetic and operating standards would have been prohibitive without tax-credit programs encouraging historic preservation. “What we found,” says Hatch, “was that we could, for almost 50 cents on the dollar, turn these old factories into gleaming, modern laboratories, offices and classrooms.”

In 2014, however, budget-conscious North Carolina legislators allowed the state’s credit program to expire. When combined with an equal federal credit, they amounted to 40% of a project’s cost and had been cited with sparking $1.5 billion in investments statewide. “They’re crucial, to the point the project would not have happened without them,” says Wexford leasing manager Will Partin. “That would have been an absolute shame, these buildings of such history, such character, sitting dormant or torn down.” Under pressure from the university and medical school, the legislature reinstated them in 2015.


On the small rise that’s the backbone of downtown stands the 16-story Reynolds American Plaza building and the Wells Fargo Center, the former Wachovia headquarters, where coats, ties and suits are still de rigueur. Here, on Third Street near Innovation Quarter, up creaky stairs above a café that was a meat-processing plant in the 1930s, Haydee Thompson greets a visitor wearing a bouncy 1950s-style dirndl skirt. Down a dim hall decorated with painted portraits of former artists who lived here, beyond the common kitchen and foosball table, through a north-facing window, sprawls Innovation Quarter. A graduate of the cross-town N.C. School of the Arts, Thompson’s cheerful demeanor contrasts with the dark, funky interior of her “art hotel,” which she leases through Airbnb. The Artists Loft above Krankies coffeehouse rents for about $95 a night on weekends.

“I’ve been here 16 years, and before that I was in New York for a while,” she says. “Before that, this was an abandoned, dying tobacco town. I call artists the first responders, the people who’ve developed a culture in a vast nothing. We’ve legitimized an area of town that was forgotten.”

This is the hoped-for result of Innovation Quarter becoming a brand of its own, complete with hangers-on. It’s a mix of learning, business, high-risk research and some of Winston-Salem’s most modern companies. Innovation Quarter has critics, however. Unlike Harold Bledsoe, who qualified for R.J. Reynolds’ vaunted retirement benefits, thousands of younger, blue-collar workers have vanishing job opportunities. Though Forsyth Tech operates emerging-technologies and small-business centers for more than 1,200 students a year at the center, local labor experts say many former factory workers lack skills — or motivation — to take advantage.

Some see the overwhelming influence of Wake Forest and the medical center as mixed blessings. Wake Forest, through its partnership with Wexford, will by the end of 2017 have invested more than $400 million in the project, more than half the total outlay, says Innovation Quarter President Eric Tomlinson.

“I was upset when Dr. McConnell decided to change the name from Piedmont Triad Research Park to Wake Forest Innovation Quarter,” says a top executive instrumental in the project since the early 1990s. “They’ve tried to reach out with things like workshops for African-Americans and the N.C. School of the Arts, particularly in the area of film technology, but this has been a community initiative and the city put a lot of money into the infrastructure. Now, people sit back and say, ‘What is Wake Forest going to do,’ rather than ‘What is the community going to do.’”

The biggest criticism is that Innovation Quarter isn’t creating enough jobs. Its largest private employer, Inmar, moved from elsewhere in Winston, aided by $2.8 million in local incentives. The expansion has led to more than 200 new jobs. “What we’ve done is just moved the deck chairs around,” says a skeptic. “We haven’t had the influx we’d hoped, not to say it might not come.”

Similarly, some question the limited role of Winston-Salem State, which initially helped the developer qualify for state funding. Mayor Joines and others see such concerns as growing pains. “Innovation Quarter is symbolic of our new economy and the new energy we have in this city,” he says.

Bledsoe sometimes comes here, to where the big chimney still stands. “It’s beautiful what they’ve done, but with the tobacco gone and the textiles gone, about all there are now are medical and technical jobs. You either work at a hospital or in a laboratory.”

Not to mention, he adds, “I still miss the tobacco smell when I go downtown.”

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