Highwoods Properties, the Triangle’s largest landlord, has expanded its downtown Raleigh portfolio by acquiring the 11-story Charter Square building on Fayetteville Street for $78.4 million.
Highwoods said it expects its total investment in the building that opened last year will be $83.5 million, which includes a total of $5.1 million for building improvements and for building out space for future tenants.
The 243,000-square-foot building was a $63 million joint venture between Raleigh-based Dominion Realty Partners and Prudential Real Estate Investors. It opened in June 2015 and was a speculative project – that is, it was built without the benefit of substantial pre-leasing.
Today the occupancy rate at Charter Square is 70 percent, up from 50 percent when the building opened last year, according to CBRE, which represented the seller in the deal. Its 14 tenants include three restaurants on the ground floor.
Last month, Highwoods, a real estate investment trust headquartered in Raleigh, signed a contract to acquire a .7-acre site at the southeast corner of Wilmington and Martin streets in downtown Raleigh. Highwoods has no immediate plans for the property, which had been the site of a high-rise office project that stalled, but noted that it can accommodate 300,000 square feet of office space.
Highwoods also owns two other office towers on Fayetteville Street in downtown Raleigh: PNC Plaza, which is 100 percent occupied; and One City Plaza, formerly known as One Bank of America Plaza, which is next door to Charter Square. The company’s total investment in the three buildings, which encompass 913,000 square feet, is $251 million.
“In the heart of downtown and very close to our existing buildings, Charter Square is an excellent addition to our portfolio that strengthens our franchise in CBD (central business district) Raleigh,” Highwoods CEO Ed Fritsch said in a statement.
Fritsch also said Highwoods is pleased with “the leasing velocity” at One City Plaza and expects that momentum to carry over to Charter Square.
The occupancy rate, percentage-wise, at One City Plaza is currently in the high 60s, but signed leases will boost it to the high 80s once the tenants move in, Highwoods spokesman Brendan Maiorana said in an email.
Highwoods said it is not assuming any debt as a result of its new Charter Square investment.