300,000SF Tower Under Way in Raleigh

Kane Realty Corp. and Duke Realty Corp. have broken ground on a 17-story mixed-use development in Raleigh, N.C. The 300,000-square-foot building, mostly office but also with a 28,000-square-foot retail/restaurant component, is scheduled for completion in the fall of 2009.CAPTRUST Financial Advisors, an investment firm, will relocate its headquarters to the top two floors of the building–a total of 51,000 square feet–when it opens. Plans call for the building to be named after anchor tenant CAPTRUST, which has a full-time staff of about 100 employees and five branch locations on the East Coast.In addition to CAPTRUST, Ogletree, Deakins, Nash, Smoak & Stewart P.C.–a law firm with locations throughout the country–along with real estate brokerage CB Richard Ellis Inc., have both leased space in the tower. All together, the building has seen a little more than 100,000 square feet of preleasing thus far.The development comes at a time when the greater Raleigh-Durham market is seeing a relatively low office vacancy rate, though in recent quarters the rate has been inching up. According to Grubb & Ellis Co., office vacancies at the end of 2007 stood at 14.7 percent, compared with 15.1 percent at the end of 2006 and 16.1 percent at the end of 2005. The fourth quarter 2007 figure of 14.7 percent, however, was up from a low of 13.6 percent in the first quarter of 2007. Rapid office development accounts for the spike at the end of 2007: some nine buildings totaling 776,500 square feet came on line in 4Q07 alone. More than 2 million square feet of office space is also slated to open this year, according to Grubb & Ellis.On the other hand, the long-term outlook for office absorption is fairly good, even in the face of a sluggish U.S. economy. The Raleigh-Durham market, and its bioscience/biotech industry base especially, have been a consistent creator of jobs in recent years.