Sorrell Alley, a.k.a. Sorrell's Alley, was built by/for William B. Sorrell in 1927, when the Carolina (later Village, now Varsity) Theater/Theatre was built on property owned by him on Franklin Street.
The alley was eight feet wide, and separated the theater building from the next door structure (in 1927 that structure was Berman's Department Store) to the west. Sorrell was ridiculed for wasting valuable space downtown, which some people felt could have better used to make his theater larger, but he wanted a convenient walkway from his house on East Rosemary Street to his optometry office in the front of the theater.
Sorrell closed the alley for a year in the 1930s or 1940s, when someone vandalised the alleyway.
Sorrell died in 1948. After his wife Elizabeth died in 1963, their daughter Eloise inherited her family properties, including the alleyway. Sometime between 1967 and 1973 she sold it to George Watts Hill (Quail Roost Corporation). During the same period, the alleyway was "beautified" and improved, a project undertaken by the Chapel Hill's Community Appearance Commission and paid for by Hill and the Chapel Hill Men's Garden Club (the beautification improvements are looooong gone, BTW).
As a sidenote, in 1966 the theater was gutted by a fire, with the alleyway saving the buildings to the west when it kept the winds from spreading the fire.
Since circa 1994 the alley has been owned by the Town of Chapel Hill. It continues to be an alley utilized by the public.
The alley, view south, 1968 (photo by Joe Jones, via Our State magazine)
From the July 28, 1927 Daily Tar Heel
View north, 1977 (via the CHHS)