How much is an aging, largely empty office park in Research Triangle Park worth?
Were about to find out.
Early next month, GE Asset Management will auction off Park Center, the 70-acre office park at N.C. 54 and Davis Drive. GE paid about $65 million for the property in 2002 when it was more than 90 percent leased to RTI International, IBM and other tenants.
Dont expect the price this time around to come anywhere near that. Today, just 10 percent of the centers 722,556 square feet of office space is leased.
Still, Park Centers central location makes it a key component in the ongoing efforts to revitalize RTP.
The 7,000-acre parks updated master plan, unveiled last fall, identified Park Center as one of three areas where future redevelopment efforts are likely to be focused. The plan envisions turning Park Center into a business-support center with a limited number of shops catering to surrounding employees.
One complicating factor for any bidder is GEs ground lease with the Research Triangle Foundation, which runs through 2049. The foundation, which manages the park, will have the right-of-first-refusal to purchase the property at the winning auction price.
Bob Geolas, the foundations president and CEO, said his organization hasnt had any contact with potential bidders and is keeping all its options open. He doesnt expect the foundations lease arrangement on the property to change.
Whoevers successful there we hope theres someone who shares our vision and wants to work with us in the redevelopment of the park and making the most of that site, Geolas said. ... I think anyone who visits that area knows that there needs to be some redevelopment done of that site. Its not ... the best use and I dont think the best example of where we see the park going.
Park Center isnt subject to the research and development restrictions that limit the type of tenants that can locate elsewhere in the park. But the center will still likely require significant capital investment to draw tenants. Much of the office space is still configured the way IBM laid it out, with exterior corridors and window-less offices in the center.
IBM once leased about 450,000 square feet in Park Center, which contains nine buildings. When the company sold its PC business to Lenovo, it moved those employees out of its own buildings and into leased space at Park Center. Lenovo later gradually exited Park Center as it moved to its new headquarters in Perimeter Park in Morrisville.
Park Center is being auctioned off at the same time that the nearby Radisson Hotel is up for the sale. The 198-room hotel also has a ground lease with the foundation that can be extended through 2049.
The Radisson, like Park Center, carries plenty of risk for potential buyers. The hotels average daily room rates have fallen 10 percent over the 12-month period ending in March, according to the flyer marketing the property.
The sale prices these properties fetch could be an early indicator of how the investment community views RTPs long-awaited effort to add more density and a wider range of amenities in the park. For RTP officials, the ideal buyers are likely to be investors with plenty of capital and patience.
The Park Center auction, which is being handled by CBRE, is scheduled for June 6.