Remaking Raleigh City Hall

Building, razing, moving - New plan for offices

RALEIGH -- The city's plan to build a downtown tower next to City Hall could create opportunities for private investors and savings for taxpayers.

The proposed Clarence E. Lightner Public Safety Center, which is expected to rise 15 stories above the northwest corner of Hargett and McDowell streets across from Nash Square, would house police and fire administrators. But the 260,000-square-foot building also could help the city consolidate employees in a smattering of offices on high-profile blocks -- property that might be thrown to the private market and perhaps generate huge gains for the city.

The Lightner public safety complex would be 4 1/2 times the size of the existing police headquarters, which would be razed to make way for the tower. That could mean gobs of extra space.

The city has discussed moving employees from One Exchange Plaza, a 10-story, 130,000-square foot office building it owns on the 200 block of Fayetteville Street, and putting it back on the market.

The city paid $8 million for the former Raleigh Federal Savings and Loan building in 2004 and filled most of it with employees of its planning, inspections, utilities and development services departments, among others.

The new public safety tower "would leave the possibility of moving those individuals to the municipal block and selling that building," said Mayor Charles Meeker.

Selling it was always part of the plan. And these days, the 22-year-old, off-white building could easily fetch twice what the city paid -- if not more. The money could offset the cost of the new tower, which could rise above $90 million, Meeker said.

Downtown's office vacancy rate, 6.8 percent, is the lowest it has been in four years, according to Karnes Research. The tightening market is leading to a building boom. But rising construction costs are pushing rents in new offices to records.

That makes older buildings with lots of unused space attractive to investors. The inflated rents in new buildings allow them to pay top dollar for older complexes, raise rents and still undercut competitors leasing new buildings.

And the city's conversion of Fayetteville Street from a sleepy pedestrian mall to a main street for cars has added cachet -- and value -- to properties on the strip in the past year.

The city might also create a handsome development site if it moves employees from offices in the block bounded by Hargett, Harrington, Dawson and Martin streets. The city owns three parcels totaling 1.2 acres on the block. They include a 30,000-square-foot building at 310 W. Martin St. that houses some of the city's community services, development, fire department and public affairs employees.

Next door is the city's Central Fire Station, which fronts Dawson Street. If the city revives a 13-year-old plan to consolidate two downtown fire stations, it could put the combined tract on the market. Residential and office developers likely would line up to bid on the property and pay at least $2.9 million, based on recent comparable downtown land sales.

That plan might prove trickier than selling One Exchange. Finding and approving a site for a new fire station could take years.

But a lot could happen by the time the public safety tower is finished.

The city is awaiting cost estimates from architects. And City Council still has to vote on how to pay for it. Then the planning department has to sign off on designs. If everything goes smoothly, the building could be finished in 2010, City Manager Russell Allen said.

By then, the city will have a better handle on whether it can free up One Exchange and the 1.2 acres with the public safety tower.

The tower might not be big enough to handle all of the employees while giving public safety departments enough room to grow. They might have to move in phases. The city has a strip of undeveloped land on the four-acre block that includes the existing police station and City Hall. It could build another building there. "We'll analyze all that," Allen said.