RALEIGH — Architects, developers and city planners have for years gazed longingly at the collection of brick warehouses just west of downtown Raleighs Fayetteville Street.
Those properties, with their indestructible shells and cavernous spaces, seemed ripe for the kind of large-scale redevelopment that turns industrial areas into hotbeds of activity. But while downtown Durham in recent years has successfully turned its cigarette factories and tobacco warehouses into a thriving mix of offices and condos, such a transformation has eluded Raleighs warehouse district.
That all may change with Citrix Systems decision to locate its new downtown Raleigh headquarters in the old Dillon Supply steel warehouse at the corner of West and Hargett streets. Citrixs plan, announced Monday, will drop hundreds of employees in a workplace the company promises will be unlike any in the Triangle.
Its also likely to be a catalyst for further redevelopment of the warehouse district as entrepreneurs open restaurants, bars and shops to cater to Citrix employees.
This is the first gunshot in the land stampede that will come to West Raleigh, predicted David King, general manager of Triangle Transit, which is selling the property to make way for Citrix.
A space that stands apart
With 20-foot high ceilings and conference rooms cut out of old shipping containers, Citrixs 2-story divisional headquarters is designed to help the company recruit the nearly 340 workers it expects to add in Raleigh over the next five years. The warehouses 50,000-square-foot roof will include a fitness center, a yoga studio, a bocce court and a restaurant with indoor and outdoor seating.
The building directly north of the warehouse will be replaced with a 6-story parking garage, with the entire complex occupying a 2-acre block.
Doing this allows us to stand apart, said Citrix CEO Mark Templeton, a 1975 graduate of N.C. State Universitys School of Design who was in Raleigh for Mondays announcement.
He added that the project is part of a real estate strategy Citrix has employed at its other major offices in Fort Lauderdale, Fla., where it is based, and in Santa Clara, Calif., London and Bangalore, India. Such investments pay off, Templeton said, when Citrix is able to recruit and retain top talent who want to live and work in urban areas and not in isolated suburban office parks.
Linux software firm Red Hat gave similar reasons earlier this year when it decided to relocate 750 workers from N.C. States Centennial Campus to a 19-story downtown tower being vacated by Progress Energy. Both companies received state and local incentives.
Citrixs offices in the warehouse district will act as the headquarters for its ShareFile data-sharing division. Citrix acquired Raleigh-based ShareFile in October and announced last month plans to relocate downtown from its offices near Crabtree Valley Mall.
A growing company
Citrix employs about 150 people in Raleigh but the company is growing rapidly. About 550 employees will be able to fit in the new headquarters, though Citrix says expansion is possible. The warehouses foundation will be poured so that two floors could be added to the building in the future. That would create room for as many as 850 employees.
Such planning speaks to how quickly demand for ShareFiles products has grown. The company makes software that enables businesses to share large files confidentially over the Internet. That growth has accelerated since ShareFile was acquired by publicly-traded Citrix, which offers a variety of products that enable companies to access specific applications as well as entire computer desktops remotely.
Citrix expects to move into its new offices by November 2013. It will immediately become the largest corporate presence in the warehouse district, which in recent years has become home to numerous arts organizations.
Were hoping that after this deal is announced more retail will come in the blocks around and also more tech companies will come there, said Jesse Lipson, founder of ShareFile and now vice president and general manager of Citrixs data-sharing division.
Citrix plans to sign a 15-year lease once Triangle Transit sells the property to a group that includes Raleigh-based private equity firm Cherokee Investment Partners and The Crown Co., a developer based in Dobson.
Property declared surplus
The group made a $2 million offer to buy the entire block after it was declared surplus property by Triangle Transit. The property recently appraised for $3.2 million, which is the amount Cherokee and Crown will be required to pay to close the deal.
The block was declared to be surplus after officials determined it wasnt needed for future rail projects. Triangle Transit paid Dillon Supply $9.8 million in late 2004 for a little more than six acres, and the remaining property surrounding the Citrix site is still expected to be used for a mass transit station and rail platforms.
Citrixs incentives package with the state calls for it to invest $12.5 million in its new headquarters. Renovating the Dillon warehouse and building the parking deck will cost far more than that. Lipson said Crown and Cherokee will finance much of the redevelopment cost, which will be built into Citrixs lease.
Lipson, 34, drew a rousing ovation from Citrix employees when he shared the stage with Templeton at Mondays announcement inside the sweltering Dillon warehouse. Given that ShareFile was swallowed up by a much larger company, Lipson couldnt be happier about how things turned out.
One concern you always have is are they going to transplant you and put you in California after a year, he said. We made the legal commitment and now were making a huge financial commitment to be here. ... The space is going to be very, very cool so hopefully it will inspire people to do something similar.