The two biggest commercial real estate stories in the Triangle right now involve a major corporate expansion and a major corporate contraction.
The fact that both of these events could happen in downtown Raleigh invokes the question: Could Red Hat takeover one of Progress Energy's downtown buildings and turn it into its new headquarters?
While unlikely, such a scenario isn't out of the question. The mere possibility brings heartburn to developers jockeying to build Red Hat a shiny high-rise with its logo at the top.
Progress, which is certain to reduce its footprint as a result of its merger with Charlotte-based Duke Energy, leases about 750,000 square feet in two downtown buildings.
Red Hat, meanwhile, is looking for 300,000 to 400,000 for its new headquarters.
Neither Progress nor Red Hat will comment directly on any possible deal.
A Progress spokesman said the company doesn't yet have a clear handle on what its space needs will be in Raleigh.
The combined utility will be based in Charlotte, and CEO Bill Johnson and other top Progress executives will move there.
"The presence will be significant, but we're not at the point in the evaluation and integration planning to know what specific organizations and functions will be stationed here," spokesman Mike Hughes said. "The space needs will be determined by those and other factors."
Red Hat has committed to staying in Wake County but won't rule out anything else.
"Red Hat is still examining all options that suit our requirements," spokeswoman Leigh Day said.
From Progress Energy's standpoint, there are few downsides to exploring a possible deal with Red Hat. The number of companies in the market for a large amount of space in downtown Raleigh is, well, one at this point.
Progress' lease situation also makes courting Red Hat a no-brainer.
The company's lease on 386,000 square feet in the older of its two buildings expires in November 2013. The lease in its newer building, Two Progress Plaza, doesn't expire until 2035.
If the company determines that it needs to reduce its footprint to one building - a scenario that Johnson has said is a possibility - the ideal solution would be to consolidate in the older building and get someone to take over its lease in Two Progress Plaza.
Red Hat, for that matter, would likely have little interest in occupying Progress' older building.
The question then becomes whether Red Hat would be satisfied with an existing building.
Such a move would save it considerable money, which is why the idea can't be ruled out. Although publicly traded Red Hat is extremely profitable, it is also very careful with every penny.
Red Hat's options open
The company spends lots of time and resources making the most efficient use of its real estate.
Red Hat is considering several downtown sites as well as suburban Wake County and Raleigh's North Hills.
Officials in January announced plans to create 540 high-paying jobs over the next nine years and build a $100 million headquarters somewhere in Wake County. To keep the tech company, state and local officials promised up to $20 million in incentives if it meets hiring and investment goals.
The company has said both cost and parking could prevent it from building in downtown Raleigh - issues that could be addressed through a deal with Progress.
Of course, an agreement between two corporate titans would be a major disappointment to developers, who are eager for a plum new project after several mean years.
One thing in their favor is Red Hat's desire to create a new headquarters that speaks to the company's culture.
While it could renovate a Progress building to make it more appealing, that wouldn't offer nearly the personalization of a build-to-suit project.
Then there is the question of where to hang that giant red fedora on a Progress building.
