Real Deals

Triangle on two short lists

Staff WriterDecember 17, 2009 

If you were to scan the holiday wish list of the Triangle's major commercial real estate players, chances are you'd see two items at or near the top: Project Cardinal and Project Prince.

Those are the code names being used to describe two large tenant prospects that are considering relocating to the Raleigh area. As the code names suggest, the searches are being conducted in a shroud of secrecy, with prospective landlords being asked to sign confidentiality agreements.

It's impossible to tell how serious these companies are about moving to the Triangle, particularly at a time when every company seems to shop around for the best state incentives package.

But in a bad economy the interest is both flattering and needed and could result in a blockbuster announcement in the coming weeks.

Project Cardinal and Project Prince have both been under way for several months.

On a Highwoods Properties conference call with analysts in late October, CEO Ed Fritsch gave a rough outline of the search particulars, saying that the smaller of the two prospects was thought to be a financial services firm.

"A lot of money and elbow grease has been invested both by us and some of our peer competitors here in this market as there have been two unidentified prospects that have come in, one looking for [100,000 square feet] to grow to [200,000], and the other looking for a 300,000-square-foot built-to-suit," Fritsch said. "Both of them are looking at multimarkets, so we may end up just being a stalking horse for their existing landlord."

Project Prince is the larger company looking at having an office tower built to meet its needs. That search team has met with Highwoods, Duke Realty and the developers behind Charter Square and Edison, two proposed projects in downtown Raleigh that have been delayed indefinitely by the credit crisis.

If either Charter Square or Edison is chosen it would be huge for downtown Raleigh, as those projects are unlikely to get built anytime soon without a large tenant signing on in advance.

Project Prince is widely thought to be RadioShack. A RadioShack representative said in e-mail that the company does not normally discuss rumors or speculation.

RadioShack is based in Fort Worth, Texas, with a lease good until 2011, and an option to extend through June 2013. Terms of the lease have not been changed, the representative said.

Fort Worth offered RadioShack up to $66.8 million in incentives in 2001 to get the company to build a 900,000-square-foot campus. The company sold the campus in December 2005 and as of last year had realized a little more than $4 million it was eligible for.

The Project Cardinal search team is looking for existing office space. The company needs 120,000 square feet immediately, plus another 120,000 square feet that it could move into in a year.

Two Raleigh sites said to be under consideration are The CapTrust Tower at North Hills and the Highwoods Tower I and II, just a few exits east along the Beltline at Atlantic Avenue.

The CapTrust Tower is a joint project between Duke Realty and Kane Realty that opened this year. It has about 160,000 square feet of vacant office space.

The company behind Project Cardinal is thought to be the Federal National Mortgage Association, or Fannie Mae. Brian Faith, a spokesman for Fannie Mae, said this month that the company has no intention of moving its Washington headquarters.

"I had heard that some people are saying that we're moving the whole company to Raleigh but that isn't the case," he said. "In terms of other staffing decisions and whatnot, I'm not at liberty to comment right now."

Fannie Mae, which buys loans from banks and sells them to investors, has about 5,800 employees with the majority based at its headquarters. It also has a substantial presence in Dallas. The company has received billions in taxpayer money since late last year.

One reason these searches are proving difficult to handicap is that they don't follow the usual script of Triangle relocations. Most companies that come to the area cite either the region's educated workforce or lower operating costs as reasons for the move - two things that the Dallas-Fort Worth area also has as Texas is considered one of the more business-friendly states in the country.

One thing is certain: If either Project Prince or Project Cardinal ends up landing in the Triangle, it will be viewed as an upbeat ending to an otherwise dour year in commercial real estate.

david.bracken@newsobserver.com or 919-829-4548

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