Real Deals

Farrin deal is a standout

Law firm's move bucks the trend in recession

Staff WriterJune 25, 2009 

Red, white and blue balloons, high-energy announcements over a public address system, back-slapping officials, hand-shaking businessmen and a just-after-noon buffet lunch. "Another day another dollar," a broker utters as he resumes chowing down.

It could have been a scene from commercial real estate's yesteryear, when new and expanding companies flowed into every corner of this region.

Yet it took place Tuesday amid a recession at the Durham Bulls Athletic Park, where downtown was welcoming The Law Offices of James Scott Farrin to a building beyond the left-field wall.

The law firm's decision to move from Imperial Center, near Research Triangle Park, to 50,000 square feet at downtown's Diamond View II office building was one of the Triangle's biggest deals of the year.

Three years ago, a deal that size might have been lost in a flurry of big relocations and expansions and may not have garnered the same level of hoopla.

Yet downtown Durham has had plenty of reason to party like it's 2006.

While most other parts of the Triangle are suffering from lackluster demand and shrinking companies, the Bull City has been a magnet for workers in the past year.

Overall, the Triangle's office vacancy rate hit a four-year high of 15.4 percent at the end of March.

Downtown Durham's office vacancy rate was 10.8 percent at the end of March, down from 16.1 percent a year earlier, Karnes Research data show. That's the biggest drop for any submarket in the Triangle during the year. In other words, no other corner of the region filled offices as quickly.

The Farrin deal should help that number drop again when the company moves this year. The firm will bring 100 employees to Diamond View II, which is in the city center's American Tobacco district.

Farrin was lured by "the idea of having a destination location for the times that there's a mediation or a deposition, or we have to discuss some in-depth detail with a client about the case," said Eric Sanchez, the firm's chief operating officer.

That says a lot about how far Durham has come in the past decade or so, as it has recovered from the exodus of tobacco manufacturers.

In recent years, the city has plowed at least $1.2 billion into things such as parking decks, a new performing arts center, transportation depots, a central park and street improvements. And the city has offered incentives to companies considering moving to the town that faded with the tobacco industry.

The Farrin deal "further validates downtown Durham as the place to be," Mayor Bill Bell says.

It comes on the heels of other recent validations. Last month, Burt's Bees, a maker of natural beauty products, moved from Keystone Park near RTP, to downtown. The company is subleasing 61,040 square feet at the American Tobacco Historic District, a little more than double what it was leasing at Keystone. The move was helped by the city's offering of up to $138,750 in incentives.

And over the past 18 months, Duke University departments have filled almost 200,000 square feet of offices in downtown buildings, expanding the university's center-city presence by 68 percent. Years ago, downtown was a harder sell, said Scott Selig, Duke's associate vice president of capital assets, who helps the university's departments find real estate.

"Six years ago, downtown Durham was seen as a lights-out closet," he said during an interview in his office, a former tobacco building in the West Village development. "Now it's sort of a lantern for the Triangle."

Apartments sold

Elsewhere in Durham, Benton Investment Co. sold the 114-unit University Apartment complex to Capstone Development for about $3.5 million. The complex, built in the late 1930s on Duke University Road in Durham, was about 91 percent occupied when the deal closed late last month.

The price --about 10 percent below the assessed value --reflects how tight lending has dampened demand for investment property.

jack.hagel@newsobserver.com or 919-829-8917

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