When Citrix Systems announced last week that it was moving its divisional headquarters to downtown Raleigh, all eyes immediately shifted to the warehouse district.
There had been rumors that a large company was seeking space in the area west of Fayetteville Street, and the amount of money Citrix plans to invest in the new site – anywhere from $11 million to $26 million, according to the city – isn’t enough to finance one of the stalled office tower projects proposed downtown.
Citrix is looking for anywhere from 80,000 to 100,000 square feet of space, an amount that is likely to require the company to move into a vacant building that’s been renovated to suit its needs.
The most likely destination for the company at this point appears to be the 55,000-square-foot warehouse at 120 S. West Street.
Cherokee Investment Partners and The Crown Co. have made a $2 million offer to buy the entire block bordered by the railroad tracks and W. Morgan, W. Hargett and S. West streets. The block, which is owned by Triangle Transit, includes two warehouses and is also home to the Men at Work Car Care Center.
Tom Darden, Cherokee’s CEO, declined to comment when asked about Citrix. He said Cherokee and Dobson, N.C.-based Crown, which have partnered on numerous deals, haven’t finalized their plans for the site.
“Crown made the offer on the project, we’ve agreed to commit capital to that,” he said. “They would commit capital as well.”
Appraised as surplus
Triangle Transit is in the process of getting the property appraised. If the appraisal comes in above $2 million, Cherokee and Crown would have to pay the higher price under the upset bid process that allows government agencies to dispose of surplus property.
The block was declared to be surplus after officials were able to nail down specific locations for future light rail, commuter rail and intercity rail stations and the platform for high-speed rail, said David King, Triangle Transit’s general manager.
“Eighteen months ago none of those were known with any degree of certainty at all where they were going to go,” he said.
Now, he said, the old Dillon Supply Viaduct building at the end of Martin Street is expected to accommodate Amtrak trains, high-speed rail and commuter rail service. Triangle Transit is working with the city about how to integrate bus access into an area north of the Viaduct building.
Cherokee is no stranger to transit-oriented development. The company owns lots of land around transit sites in other states but doesn’t own any property near proposed Triangle Transit stations.
Before the real estate crash, Cherokee specialized in cleaning and redeveloping contaminated property. After sitting on the sidelines for a number of years, the private equity firm has begun making selective land acquisitions in more proven locations.
Last year it bought 169 acres at Brier Creek and 113 acres in the Wakefield area of North Raleigh.
Cherokee on the move?
Darden said Cherokee has long wanted to have its offices in the warehouse district, and even considered moving to the site it made an offer on several years ago. The firm decided against it because there was relatively little going on in the area at the time and Triangle Transit’s plans for the property it was acquiring weren’t yet clear.
Cherokee today occupies space in a building on Hargett Street near Moore Square.
Darden said whether Cherokee ends up moving to the warehouse district will depend on how much demand there is for the available space from other tenants.
Of the two warehouses Cherokee and Crown are poised to buy, only the 120 West building is likely salvageable. An adjacent, 22,000-square-foot warehouse is basically falling down and may need to be torn down. Cherokee and Crown plan to redevelop the block in pieces, starting with rehabbing the 120 West building.
Darden said for years sections of the warehouse district have suffered from a kind of development paralysis, with developers and officials alike torn between tearing aging buildings down and starting over or redeveloping structures at considerable cost.
“There’s always some reason to wait or there’s some uncertainty,” Darden said. “Nobody can pull the trigger.”
If Cherokee and Crown land Citrix as a tenant, their timing would be particularly good. In addition to occupying office space, the company’s workforce, which is expected to eventually reach more than 450, would create demand for restaurants and shops.
And while no one knows when, or even if, light rail will arrive, few properties are better positioned to benefit if it does.