MORRISVILLE — Duke Realty has begun construction on a new speculative office building at Perimeter Park, the latest sign of the Triangle office market’s improving health.
Duke expects to complete the 206,000-square-foot building, called Perimeter Two, by June 2014. Jeff Sheehan, a senior vice president with Duke, said Monday that the company has preleased a little over half the space in the building to three tenants: MaxPoint Interactive, Fujifilm Medical Systems and Compliance Implementation Services.
“It’s really become a tight market out there,” Sheehan said, noting that Duke conducted a study that found only a handful of newer, vacant spaces larger than 50,000 square feet in the Triangle.
The region has seen very little speculative office construction since the credit markets froze in 2008, which has left tenants looking to move with few options. Developers today are required to have more of a building preleased, and to put up more equity to secure financing.
Sheehan said the business case for building a new office building is actually stronger today than it was in 2007, but the market correction has imposed new discipline on both lenders and developers.
Duke expects to have the entire Perimeter Two building leased by the time it opens, and Sheehan said the company has begun site work on two other office buildings planned for the Perimeter Park campus.
Perimeter Park is now home to a little more than 2 million square feet of office space, about 97 percent of which is leased, Sheehan said. The park’s largest tenants are PC-maker Lenovo, the contract research organization PPD, and Tekelek, a telecom company that was acquired by Oracle earlier this year.
Duke has room to build about 2 million square feet of additional office space at Perimeter Park, a 180-acre campus at the intersection of Interstates 40 and 540.
Perimeter Two has been in the planning stages since 2008. In recent months Duke has spent millions grading the site and extending the road in anticipation of breaking ground.
The three tenants who signed leases are all existing tenants in other Perimeter Park buildings. Sheehan noted that they represent sectors that have become major drivers of the Triangle economy.
“It’s sort of a microcosm of why the Triangle is producing jobs and doing so well,” he said.
Fujifilm, which makes a range of medical imaging devices, will occupy an entire floor – or 42,000 square feet – in the new building. That’s about four times the space it currently occupies.
MaxPoint, which has 65 employees in Morrisville, is also taking an entire floor and quadrupling its space.
The company uses the super-processing power of “Big Data” to help companies reach consumers in particular neighborhoods online. MaxPoint collects billions of data points from brick-and-mortar stores and online and social media to identify neighborhoods that are fertile grounds for a particular product or service.
Philadelphia-based Compliance Implementation Services, which is taking 23,000 square feet, helps pharmaceutical, biotechnology and medical device companies meet regulatory requirements for developing and selling drugs and other products. The company has about 50 employees in Morrisville, its largest office, and its new space will enable it to expand its staff by 60 percent, said Karen Brown, vice president of marketing.
Brown said the growing complexity of health care regulations is leading more and more companies to outsource the work to CIS, which counts 27 of the largest 50 pharmaceutical companies as customers.
“This is our fastest-growing office,” she said. “We’ve outpaced all our other offices.”
Perimeter Two is the first speculative project Duke has been involved with in the Triangle since it partnered with Kane Realty to build the CapTrust Tower at North Hills in 2007. Few could have imagined back then that the construction moratorium that took hold a year later would last this long.
Certainly not Sheehan, who oversaw $200 million in new construction projects when he took over the Triangle office in 2007.
Duke has a Nepalese gong hanging in its Morrisville offices that employees bang when good things, such as a lease signing, occur. When the decision to build Perimeter Two was made, the gong was rung five times – one for each floor.
“This building to me almost feels historic,” Sheehan said.