Real Deals

Investor is ready to sell Bank of America tower

Few high-profile office buildings have gone on the market lately

Staff WriterSeptember 23, 2010 

One of the Triangle's largest office buildings is back on the market.

One Bank of America Plaza, the 17-story tower at 421 Fayetteville St. in downtown Raleigh, has been listed by The Simpson Organization, the Atlanta investment group that paid $47.1 million for the building in July 2005.

Simpson's decision to entertain offers is not surprising considering where the building is and its status as one of the Triangle's trophy properties.

Though relatively few office buildings have changed hands in recent years, high-profile assets with stable tenant rosters have garnered lots of interest from investors.

Just last week, Hines Global real estate investment trust completed its $98 million purchase of Durham's Hock Plaza I. The purchase price was just under the $100 million the seller paid in November 2005.

One Bank of America's 367,000 square feet was about 80 percent leased when Simpson bought the building.

It is about 95 percent leased, according to a Grubb & Ellis Thomas Linderman Graham survey of Triangle office space. In addition to Bank of America, tenants include the law firm Hunton & Williams and Absolute Collection Service.

The building is in a submarket - downtown Raleigh - that had the lowest vacancy rate of any in the Triangle at the end of the second quarter. Downtown's vacancy rate was 7.7 percent, compared with 18.9 percent for the entire Triangle.

Construction at a standstill

And because of the credit crunch, no new office buildings are being built downtown. Both Charter Square, the two-tower project slated to be built next to One Bank of America, and Edison have been delayed indefinitely and are likely to require a sizable anchor tenant to get financing.

The Simpson Organization has made significant improvements to One Bank of America Plaza since acquiring it five years ago, said Ben Kilgore, a CB Richard Ellis investment sales broker in Raleigh. "The building's in excellent condition," he said. "I think it's probably a really good time to sell."

When Simpson bought it from LNR Property, the city and county were spending millions building the new convention center, reopening Fayetteville Street to traffic and converting the space in front of One Bank of America into the City Plaza.

That work is complete, and downtown today has more residents, restaurants and nightlife than it has had in decades. The Simpson Organization also owns the four 1,000-square-foot glass retail pavilions on City Plaza.

Simpson's 2005 purchase price was about $130 per square foot.

Less than two years later, the nearby Wachovia Capital Center fetched $153.4 million or $278 per square foot, in a deal during what was perhaps the peak of the commercial real estate boom.

Though Simpson is unlikely to get anywhere near that much per square foot, the company's decision to sell could be a positive sign for the investment sales market.

"I think it's a good sign that we're starting to see, finally after arguably a three-year hiatus, some transactions in the market," Kilgore said. or 919-829-4548

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