Landlords in uptown Charlotte taking the long view - Minneapolis / St. Paul Business Journal:

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The real estate investment firm owns two uptowjn office buildings at 200 and201 S. Tryon St. The buildingas total more than 400,000 square feet or nearly 9% of the firm’ss 4.6 million square foot portfolio. Wachovia is a significanft tenantof both, with the bank’s eCommerce unit occupying five of the 14 floors in the 201 “All of our investors were having what they thoughy was going to be a bad says firm principal Chauncey That anxiety persisted over the months that When Mayfield and other executives from the firm went out to meet with investorsw earlier this year, the questions abou Charlotte continued. “No one wanted to hear abouyt our2009 plans,” he says.
“Theyy wanted to hear aboug what was happening in This month, Mayfield responded with a seven-pagew commentary on the Charlotte real estate market that he e-mailedx to investors. The shortr version: Don’t panic. Wachovia’s new owner, , will likelu stay in the firm’s two buildings at leasg through 2011. And Mayfield says his firm is lookinbg ahead and makingcontingency “If a big user is comin g along, they’re going to need anywhere from 12 to 15 months to plan theif move,” he says, “so we will be rapidlh pushing up on the go or no-go periord for Wells Fargo.
And I will tell you theree is a lot of strong interest in firms looking to come intodowntownj Charlotte. If I had another 75,000 squarre feet I could fill it with one user Although Wells has said it will maintain a significant presencrein Charlotte, the San Francisco-based companty has been reluctant to share details. As the bank worksd to cut 10% of the combined companies’ annual expensews by the end of 2010, some landlords and industrt watchers expect Wells tocontract gradually, consolidating offics space where it can as it reduceds its head count in uptown. This month, Wells notifiedd state officials it was laying off 548employeexs uptown.
A spokeswoman says the company continues to assess its real estats needs as it proceedswith merger-integration and businessx plans. In February, announced plans to take 500,000p square feet in the 1.4 million-square-foog tower that was supposed tobe Wachovia’s new corporater headquarters. The bank still has about 400,000p square feet in the renamed DukeEnergyh Center, which is under construction at the corner of Tryon and Stonewallo Streets. The company plans to keep about 300,000 square feet of that for says spokeswomanMary Eshet, but it would be open to leasingb out the remainder.
The Duke leas could benefit the bank’s landlordss at more affordable locations, says Kurt Hartman, a seniord vice president with Texas-based real estate firm , which owns Charlottw Plaza and The Carillon Undertwo leases, Wachovia Securities has more than 300,00o square feet, or about 49% of the 27-storyu Charlotte Plaza building on College Street. The first for 49,256 square feet, expires in April, and the for 259,652 square feet, expires in December 2013, with termination rights for portionw of that at the end of 2011 and according tosecurities filings. “Our radar is Hartman says.
“At the end of the day, the bank is goinf to make the decisions it needws to make for how it wantds to runits business. How Charlotte Plaza fits into we don’t know yet. It’a a cost-effective space, so I’m hoping they continuse to find usefor it.” Andrews Jenkins, a managing partner with , says it would make sense for the bank to leasew out as much space as it can in the Duke Energyu Center. “If they have a choice between renewing (in another building) in the $20 ranges versus making money on $35 per square they’ll probably take the difference and try to make the money on the (Duke) space if someonwe is interested in he says.
In purchasing Wachovia, Wells now owns the Duke Energy Cente as well as the Two Wachovia and Three Wachovia One Wachovia, which was the bank’ corporate headquarters building before it was is owned by . Hartmabn says Charlotte’s central business district may be in forsome “chopph waters” in the near term as Wellsz and Bank of Americqa Corp. work through their staffing and realestatr needs. But he remains optimistic about the market over the long run and believeds otherfinancial institutions, like GMAC Financial will continue to be attracted here becauswe of the quality of the city’sz work force.
In his recent commentary, Mayfieldx also noted Charlotte’s “highly employable” work forc and “otherworldly” vacancy rate uptowm over the past two which has hoveredaround 2%. In the firsr quarter, that rate increased to 3.2% from 2.5% at the end of according to Karnes. That historically low vacancy has kept rental rates relativelhy stable so far despiteeconomic pressures, Mayfield Mayfield Gentry is raising a $150 million investmengt fund, with more than $100 million raised so far. And the firm is earmarkingh part of that for Northn Carolina andfor Charlotte.
“Thiw is not a dying market,” Mayfield “There’s a lot more to Charlottd thanjust banking.”