A not-so-big lease holds out promise

On size alone, the nearly 9,000-square-foot lease recently signed by tech startup Talari Networks classifies as a very minor deal in Triangle commercial real estate.

More than 8.4 million square feet of office space is vacant in the Triangle, and the deal will not bring down the Triangle's 18.9 percent vacancy rate.

But take a longer view and it's easy to see how Talari represents the type of activity that the Triangle needs.

Talari was able to relocate to Duke Realty's Perimeter Park in Morrisville and double its space after it raised $10 million in venture funding last month. The company, which has 15 employees in the Triangle, expects its work force to more than double over the next 18 months.

The Triangle is home to dozens of similar tech and biotech companies that rely on venture funding to pay for expansion. In recent years, the ability to raise such money has been made more difficult by a lack of institutional capital flowing into venture funds, many of which have struggled to produce good returns.

Though venture funding has long played a key role in the Triangle's growth, such funding has become even more important in a deepening economic downturn. .

A number of the region's largest and historically most reliable tenants - Glaxo SmithKline and Blue Cross and Blue Shield to name two - are reducing their real estate footprint in an effort to reduce costs.

"In this recession, I feel like it's even more important that [venture capitalists] get involved with these high-growth companies to not only fuel the growth and create jobs but to fill up these empty buildings," said Ryan Lawrence, a broker with Jones Lang LaSalle.

Lawrence recently helped iContact, which just raised $40 million in venture funds, relocate to Perimeter Park and 70,000 square feet of space that was formerly occupied by Lenovo. The move doubled iContact's space.

The good news for the Triangle is that more local companies have raised money in recent months.

A dozen Triangle companies raised more than $112.2million in venture funding in the second quarter, the most since the fourth quarter of 2008.

Talari's $10 million won't be included in the Triangle's third-quarter results, because the company's headquarters is Cupertino, Calif.

But most of Talari's 33 employees are based in Raleigh, where it does research and development.

The company, which makes networking equipment that helps companies reduce their bandwidth charges, was founded by John Dickey andAndrew Gottlieb in 2006.

Dickey has lived in the Triangle since 1990.He decided to keep Talari's engineering team in Raleigh for professional and personal reasons.

The area is flush with networking engineers. Dickey's wife graduated from N.C. State University, and his daughter is a student there.

Talari's growth has followed a path familiar to many startups: Dickey began working out of an extra room in his house, then moved to space above a coffee shop and then to a doctor's office.

"We'll be in North Carolina, as far as I'm concerned, as long as this company exists," Dickey said.

For Duke Realty, Talari represents a bet on the future. By establishing a relationship with the company early on, it puts itself in a position to benefit should Talari require additional space.

"We feel like, if they can make things work, at the end of the day the relationship will be such that they won't want to leave," said Hooker Manning, a Duke Realty vice president who handles leasing at Perimeter Park. "We've got space for them for the long haul."