The Cary developer is planning a $28 million, 125,000-square-foot office building called Alliance Center I at N.C. State University's Centennial Campus. And it might break ground without commitments from tenants.

A couple of years ago, it was common for developers to begin building without any space reserved in advance. "Speculative" or "spec" is what developers call that gamble, one that is founded in confidence that a fertile economy would drive new and expanding companies to their properties.

As job growth has slowed, however, so too has office leasing. That has shaken the confidence of many commercial builders and, more importantly, financiers -- many of whom will now only fund projects with pre-leasing.

"As we see the world today, Alliance is one of the few places where we would take a speculative stance in this market," said Jack Dunn, Davis president. "We're really focusing our attention on places where we feel like there's a special story right now. And this is one of those."

His comfort is understandable.

The campus off Avent Ferry Road and Centennial Parkway has sprouted in large part because of corporate tenants who have flocked to Centennial to collaborate with university researchers or pluck from the ranks of recent graduates.

"The economy has shifted to a knowledge-based economy, and universities are knowledge-based resources," Dunn said. "The university continues to attract partners, which is a testament to the success of Centennial Campus."

Last year, McKim & Creed decided to move its Triangle division to Centennial. The engineering firm wanted to establish relationships with engineering students through internships and training initiatives, with the hopes of hiring the best when they graduate.

McKim joined companies such as Swiss power conglomerate ABB, which has been expanding its power systems subsidiary based at Centennial. Two years ago, packaging company MeadWestvaco decided to open a research center at Centennial.

Because of the activity, there's little available space at Centennial for more tenants. All but 1 percent of its 2.4 million square feet of labs, offices and classrooms are full, said Bob Fraser, associate vice chancellor of Centennial Campus.

And there's little room for competitors to build. The university controls what is built on the land. Davis had to compete with other developers for the deal, eventually winning a 65-year land lease for the 3.18-acre Alliance site.

Meanwhile, the campus is surrounded by two of the tightest Triangle office markets: West Raleigh and downtown.

Those factors are the same reasons MayfieldGentry Realty Advisors of Detroit led investors to pay a near-record sum for five Davis-built Centennial office buildings. MayfieldGentry paid $105 million, or $222 per square foot -- almost 50 percent above the average price of Triangle offices sold in 2007 -- for Venture I-IV and Venture Place, which are across Main Campus Drive from the Alliance Center site.

The Venture deal closed late last year amid a credit crunch that has hampered investors' ability to secure debt for commercial real estate.

The 474,000-square-foot Venture portfolio, Alliance's main competition, is 99 percent occupied. Almost 60 percent of it is leased beyond 2015 from reliable tenants, including ABB, the U.S. Department of Agriculture, and software company Red Hat.

Because that space is tied up, Davis and lenders could get more comfortable with Alliance as a speculative project.

Centennial has been a haven for Davis, one of the most prolific Triangle developers in the past decade. When the tech bust of the early 2000s halted other Triangle office developers, Davis and partner GE Asset Management pressed on with two Venture buildings at Centennial.

Today, like then, Davis' other office projects -- including Charter Square in downtown Raleigh and Butterball's Garner headquarters -- either have significant pre-leasing or need it to be built.

Even if lenders required Davis to secure pre-leasing for Alliance I, the developer has time to line up tenants. Plans for the building, a 450-space parking deck and an auxiliary 15,000-square-foot building with restaurants and services still need approval from city planners.

Dunn expects the process to take a year. He hopes to finish building in 2010. "We have a fair amount of interest already," he said.

At least one prospective tenant has signed a letter of intent for 12 percent of the space, Dunn said, declining to name the company.

Alliance is among several new buildings planned at Centennial.

The university is building a 240,000-square-foot engineering building on the campus. And in recent months, it tapped Keystone to build up to 75,000-square-feet of labs catty-cornered from Alliance. Also, funding was approved last month for a 220,000-square-foot library, which is being designed.

The name Alliance Center I leaves a pretty bold hint: Alliance II could be in the offing.

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