Real Deals

Real Deals: RTP’s latest move shows needed urgency

dbracken@newsobserver.comFebruary 5, 2014 

In recent years, as the Research Triangle Park has methodically – some might say ploddingly – moved to reinvent itself, its efforts have been viewed with a healthy bit of skepticism by more than a few members of the local development community.

Park officials have said all the right things about needing to add amenities and create a more stimulating environment within its borders, but too often RTP seemed incapable of taking bold action to ensure its continued success for the next 50 years.

Until now. The Research Triangle Foundation’s announcement this week that it had paid $17 million to acquire the Park Center office complex and two adjacent properties was the sort of move many have been waiting for.

“I’ve been skeptical about the future path of Research Triangle Park for quite some time,” said Gregg Sandreuter, a Cary developer who is behind the Edison apartment and office project in downtown Raleigh.

But Sandreuter equated the foundation’s investment to the City of Raleigh’s decision to spend $10 million to open up Fayetteville Street to vehicular traffic.

“This is a very important and necessary investment,” Sandreuter said. “This is proof positive the foundation is taking concrete steps to transition the park into the 21st century, which is great for the park and great for the region.”

It’s way too early to say whether the foundation’s plans for Park Center will succeed. While RTP has been overhauling its master plan and getting to the point where it could make such an investment, the rest of the Triangle real estate market has been maturing.

Although RTP officials like to say the park competes with Beijing, Europe and other global research and technology hubs, the truth is that the park will now be in competition for development dollars with other thriving areas of the Triangle.

It remains to be seen, for example, how much demand for residential units there will be at a place like Park Center, which may have better success being simply a place where park employees and visitors can entertain and socialize.

The flexible office space in Park Center is likely to be targeted at the university research community and existing corporate tenants in the park. Demand for that space may depend on the level of government funding for such efforts.

Still, nearly everyone agrees that the foundation was the only logical buyer for Park Center, and that it is the ideal location to add the restaurants, cafes, shops, hotels and collaborative office space that RTP now lacks.

Demolishing Park Center’s largely unoccupied office buildings, which contain roughly 720,000 square feet, will also bring down the vacancy rate in the Interstate 40/RTP corridor. The rate was 23 percent in the fourth quarter, compared with 15 percent for the entire region, according to Karnes Research, a Raleigh firm that tracks commercial real estate trends.

“That’s where you want to create the village that RTP desperately needs,” said Jim Anthony, CEO of Colliers International in Raleigh.

Whenever the pace of change in the park has been criticized, officials’ response has generally been that they feel an enormous responsibility to get things right given how much RTP has meant to the economic advancement of the Triangle and the state. They also point to the need to make sure all the various stakeholders in the park are in agreement.

The foundation trumpeted its investment in Park Center by saying it will allow construction to move ahead at least a year sooner. That urgency is overdue.

“The key is getting good folks in there who can deliver quality product soon,” Anthony said. “They need to do this quickly.”

Bracken: 919-829-4548 or dbracken@newsobserver.com; Twitter: @brackendavid

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