Wilmington officials are taking steps to sell a city-owned portion of downtown’s River Place complex to developer East West Partners.

The city plans to sell roughly 34,000 square feet of ground-floor commercial space, which East West Partners has leased from the city since 2018. The Wilmington City Council held a public hearing and voted unanimously on Tuesday to amend River Place’s purchase and development agreement, allowing the city to sell the portion of the 202 N. Water St. property.

A third-party appraisal, completed in October, found the property’s market rate value is $1.2 million.

In January, council members approved a resolution authorizing City Manager Tony Caudle to negotiate the sale with East West Partners. As of Tuesday, the city was still in negotiations with the development firm, according to Lauren Edwards, the city’s communications manager. A timeline for the expected sale was not available.

The 13-story River Place is a mixed-use complex that was completed in 2020. The project, a public-private partnership between the city and East West Partners, replaced a defunct parking deck with a new parking deck and built apartments and condominiums, along with ground floor space for commercial tenants. Last year, East West Partners started converting the complex's apartments into condos.

The East West Partners ground lease began in January 2018 with an initial term of 50 years and two options to renew for 25 years and another 24 years. The original lease had an annual rate of $48,552, which has escalated to $56,897.

Aubrey Parsley, Wilmington’s director of economic development, told the city council on Tuesday that selling the ground-floor commercial area aligns with the city’s real estate strategy, which includes simplifying real estate holdings, primarily through dispositions, and prioritizing “activity which yields cash proceeds for the city.”

Last fall, officials identified the ground-floor River Place square footage as a potential market rate sale.

“Selling the property and the ground lease that goes with it would allow the city to bring forward a significant portion of the benefit of that lease in cash today,” Parsley said, “and it would also simplify, to some extent, the public-private partnership with East West.”

Parsley noted that even after a sale, the city and East West Partners would still have “shared responsibilities” at the complex, with the city continuing to own and operate the adjacent parking deck.

Proceeds from the sale will be used to pay down the debt service for Skyline Center, the city’s offices at 929 N. Front St.