Tower of power: the landmark Reynolds Building is the latest piece of the tobacco empire downtown developers want to renovate.

• Author: Mildenberg, David

Nearly three decades after Ross Johnson called Winston-Salem too bucolic to attract young professionals, out-of-state developers are poised to prove the former RJR Nabisco Inc. CEO wrong. Johnson saw untapped value in the tobacco-and-snacks conglomerate and departed with a $60 million payout ($115 million in today's dollars) after moving company headquarters to Atlanta, sparking a $25 billion leveraged buyout and shaking the confidence of North Carolina's fifth-largest city. Now developers see fortune in the physical remains of the Reynolds empire, their hopes tied to a vibrant downtown arts and restaurant scene and the nearby Wake Forest Innovation Quarter research park.

At the research park, San Diego-based BioMed Realty Trust Inc. has invested about $250 million to convert old R.J. Reynolds Tobacco Co. factories and warehouses into laboratory space and offices where about 3,000 people work, most for Wake Forest Baptist Medical Center or Inmar Inc., a local e-commerce company that moved 900 employees there this year. Other developers are betting some of those workers--and perhaps many more to follow--want to live as well as work in relics of the Twin City's industrial past.

Ron Caplan, president of Philadelphia-based PMC Property Group Inc., is tackling the most glamorous project, renovation of the 22-story Reynolds Building into 120 apartments and, on lower floors, a 211-room hotel operated by San Francisco-based Kimpton Hotel & Restaurant Group LLC. PMC and Kimpton bought the building in June from Winston-Salem-based Reynolds American Inc. for $7.8 million. That's less than the $10.5 million compensation paid last year to Reynolds CEO Daniel Delen, who retired in May. After more than $50 million of work, developers plan to reopen the building by 2016. The cigarette company, which hasn't used the building in five years, sought an owner who would help make downtown Winston-Salem more attractive to tourists and business travelers, Andrew Gilchrist, president of the R.J. Reynolds Tobacco Co. subsidiary, said at the press conference announcing the sale. Greensboro-based Quaintance-Weaver Hotels LLC considered buying the building before backing off in 2012.

Architects cite the Reynolds Building as one of the nation's best examples of art deco skyscraper design, and it was the model for the Empire State Building in New York City. When it opened in 1929 as the tobacco company's headquarters, it was the tallest building between Baltimore and...