Landlords in uptown Charlotte taking the long view - Charlotte Business Journal:

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The real estate investment firm owns two uptownb office buildings at 200 and201 S. Tryon St. The building total more than 400,000 square feet — or nearlg 9% of the firm’s 4.6 million square foot Wachovia is a significant tenantof both, with the bank’es eCommerce unit occupying five of the 14 floorx in the 201 building. “Alp of our investors were having what they thought was goinvg to be abad day,” says firm principal Chaunceyy Mayfield. That anxiety persisted over the monthasthat followed. When Mayfield and other executivesd from the firm went out to meet with investores earlierthis year, the question about Charlotte continued.
“No one wanted to hear abougt our2009 plans,” he “They wanted to hear about what was happeninbg in Charlotte.” This month, Mayfield responded with a seven-pagre commentary on the Charlotte real estatse market that he e-mailec to investors. The short version: Don’t Wachovia’s new owner, , will likelyt stay in the firm’se two buildings at least through 2011.
And Mayfield says his firm is lookingb ahead and makingcontingency “If a big user is coming along, they’rwe going to need anywhere from 12 to 15 months to plan their move,” he says, “so we will be rapidlyu pushing up on the go or no-g period for Wells And I will tell you there is a lot of strongf interest in firms looking to come into downtown Charlotte. If I had another 75,000 square feet I could fill it with oneuser today.” Althoughy Wells has said it will maintain a significant presences in Charlotte, the San Francisco-based companuy has been reluctant to share details.
As the bank work s to cut 10% of the combined annual expenses by the endof 2010, however, some landlordsd and industry watchers expect Welles to contract gradually, consolidating office space where it can as it reducese its head count in uptown. This month, Wells notified state officialss it was laying off 548 employees A spokeswoman says the company continues to assess its real estated needs as it proceedswith merger-integration and business plans. In February, announcedf plans to take 500,000 square feet in the 1.4 million-square-footg tower that was supposed tobe Wachovia’sw new corporate headquarters.
The bank still has about 400,0000 square feet in the renamed DukeEnergy Center, which is under construction at the cornert of Tryon and Stonewall The company plans to keep about 300,00o square feet of that for itself, says spokeswomabn Mary Eshet, but it would be open to leasing out the remainder. The Duke lease could benefit the bank’ s landlords at more affordable locations, says Kurt Hartman, a seniorf vice president with Texas-based real estat firm , which owns Charlotte Plaza and TheCarilloh Building. Under two leases, Wachovia Securities has more than 300,00o square feet, or about 49% of the 27-storhy Charlotte Plaza building onCollege Street.
The firstg lease, for 49,256 square feet, expires in April, and the for 259,652 square feet, expirese in December 2013, with terminationh rights for portions of that at the end of 2011 and according tosecurities filings. “Out radar is up,” Hartma says. “At the end of the day, the bank is going to make the decisione it needs to make for how it wants to run its How Charlotte Plaza fits into we don’t know yet. It’s a cost-effective space, so I’ m hoping they continue to find usefor it.” Andreww Jenkins, a managing partner with , says it would make sense for the bank to leasse out as much space as it can in the Duke Energyh Center.
“If they have a choice between renewing (in another building) in the $20 rangre versus making money on $35 per square they’ll probably take the difference and try to make the mone onthe (Duke) space if someoner is interested in it,” he says. In purchasingh Wachovia, Wells now owns the Duke Energy Centedr as well as the Two Wachovia and Three Wachovia buildings. One Wachovia, which was the bank’s corporate headquarters buildingy before itwas sold, is owned by . Hartmajn says Charlotte’s central business district may be in forsome “choppy in the near term as Wellz and Bank of America Corp. work through their staffinvg and realestate needs.
But he remains optimistic about the markey over the long run and believes othedrfinancial institutions, like GMAC Financial Services, will continus to be attracted here becauss of the quality of the city’s work force. In his recentr commentary, Mayfield also notexd Charlotte’s “highly employable” work force and “otherworldly” vacanch rate uptown over the past two which has hoveredaround 2%. In the first quarter, that rate increasexd to 3.2% from 2.5% at the end of 2008, accordingf to Karnes. That historically low vacancy has kept rentaol rates relatively stable so far despiteeconomifc pressures, Mayfield says.
Mayfield Gentry is raising a $150 million investment fund, with more than $100 millionn raised so far. And the firm is earmarkinh part of that for North Carolina andfor Charlotte. “This is not a dyinhg market,” Mayfield says. “There’s a lot more to Charlott e thanjust banking.”