Real Deals

Fidelity hunkers down in RTP

The mutual fund company signs a 10-year lease for a former Nortel space.

Staff WriterJuly 29, 2010 

Nortel Networks may have walked away from Research Triangle Park, but Fidelity Investments is sticking around.

The Boston mutual fund company has signed a 10-year lease to occupy 220,000 square feet that it had been subleasing from Nortel.

The deal is one of the biggest office leases signed this year in the Triangle, and it likely means Fidelity will be in no hurry to build a new campus on the 268 acres it owns in RTP.

Fidelity recommitted to the Nortel space even though its owner, Zurich Structured Finance, will soon be foreclosed upon or simply hand the property back to the lender.

The deal is particularly good news for RTP, where the office vacancy rate was 26 percent in the second quarter, according to a Grubb & Ellis Thomas Linderman Graham market survey.

CB Richard Ellis was appointed receiver for the Nortel space by the courts and has been handling the leasing since April 1.

With the Fidelity signing, CB has leased nearly a third of the 680,000 square feet that became available when Nortel rejected its leases in March. Fidelity is occupying two of the four buildings that together are known as the Network Center.

"They could have just walked away," said Andrew Kelton, head of CB's asset services group, who brokered the deal along with Ed Pulliam. "They wanted to sign a new lease-up. I think that's a very good sign for Fidelity and the market."

John Linderman of Grubb & Ellis represented Fidelity in the deal.

Fidelity employs about 2,300 people in RTP, where it has technology, customer service and human resources operations. The company has reduced its local work force by nearly 150 jobs since the end of 2008 - a level of cuts that pales in comparison to the company's employment reductions elsewhere.

Fidelity also operates a data center in the park.

Building plans on hold

Fidelity announced in 2006 that it planned to build a RTP campus, but those plans were put on hold when the economic downturn began.

This year the Research Triangle Foundation gave Fidelity three additional years to begin construction. Fidelity also is considering building a second data center in Garner.

The new lease allows the company to stay where it is and gives it flexibility, Fidelity spokeswoman Jennifer Engle said. She said the company has no timetable for when it might move forward with a new campus.

"We're continuing to evaluate our needs in this area," Engle said.

Zurich paid Nortel $81 million in 2001 for the Network Center in a sale, lease-back deal. The buildings are on a 116-acre parcel at the southeast corner of N.C. 54 and Davis Drive.

Nortel, which filed for bankruptcy in January 2009, was paying nearly $900,000 a month to lease space in the buildings.

Kelton said CB has several prospects interested in the two remaining Network Center properties - a 103,000 square feet building and a three-story, 340,000 square-foot building.

CB adds employees

The Fidelity lease is the first big deal landed by Kelton and Pulliam since they joined CB in January. Their arrival coincided with the firm's move from Cary to new digs on the 12th floor of the Captrust building at North Hills.

Pulliam came from Craig Davis Properties, where he was chief operating officer.

Kelton, 51, joined CB after overseeing Duke Realty's East Coast portfolio. Though he bagged plenty of major tenants during his stint at Duke, the Fidelity deal was his first lease as a broker.

Kelton recruited another highly regarded broker to CB last week when Brad Corsmeier left Cassidy Turley to join the firm as a senior vice president.

About a third of CB's 43 employees are brokers, and Kelton said the office likely hasn't finished adding talent.

Kelton's goal at CB is the same as it was when he took over Duke's Triangle operations a decade ago: "To become a dominant player in the market," he said. or 919-829-4548

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