Raleigh’s skyline is changing as more construction projects come to downtown
When The Fallon Co. entered the downtown Raleigh real estate market, it made waves by spending big sums for land and announcing that it was going to build a new 19-story tower without having any tenants signed.
But the Boston-based company has now nabbed its first tenant before moving any dirt.
Raleigh tech startup Pendo, which is growing rapidly in downtown, will be moving into the 301 Hillsborough tower when it opens in early 2022.
Pendo will occupy five floors and nearly half of the 258,000 square feet of office space in the tower. Its office there will also feature a private terrace on the top floor that overlooks downtown.
Pendo said in a release it will be moving all of its employees to the tower. Currently, the company has nearly 250 employees in the Wells Fargo tower in Raleigh.
Michael J. Fallon, president of The Fallon Co., said the company didn’t expect to sign a tenant for the building so quickly, making the lease a big win for the company. He noted that several landlords were vying for Pendo’s signature.
“We were very fortunate because Pendo is exactly the kind of tenant we were looking for in this building,” Fallon said in a phone interview. The building “was always going to (have) a progressive design and it was going to be a tech-heavy building, and what (Pendo CEO) Todd Olson is doing with Pendo is exactly like that.”
Pendo has been one of the most promising startups in Raleigh in recent years. The company has raised more than $100 million from investors and last year it received a $10.7 million incentive from the state of North Carolina to grow its headcount in Raleigh to nearly 600 people.
After receiving that incentive, Olson told The N&O that the company would be outgrowing its offices in the Wells Fargo tower. “We think that we are going to have ‘Pendo pink’ somewhere (else) on the skyline,” Olson said at the time, referring to the company’s signature color.
Olson and Fallon both confirmed that Pendo would have signage rights on the top of the building. Olson said he never once thought about Pendo’s name gracing the city’s skyline when he started it out of HQ Raleigh several years ago, but he said it would be great for the company’s brand.
“Honestly, I don’t think I had ever thought about the name being on a top of the building,” he said. “But now that it is here, I think it is going to be good for the company. ... It is a way for us to get our brand out across the area.”
The Fallon Co. bought the property at 301 Hillsborough St. for $17 million in 2018. The land, which The Fallon Co. bought from the Lundy Group and Hyde Street Holdings, has long been targeted for dense development.
In 2017, Lundy and Hyde planned to use the land to create City Centre, which also would have been 20 stories, before they scrapped those plans and decided to sell. The city block bordered by Hillsborough, Harrington, Dawson and Morgan streets is nearly all owned by The Fallon Co. The only parcel it doesn’t own is home to the pub The Flying Saucer. Fallon said that while he would have liked to buy the Flying Saucer’s property, the owners of the pub haven’t wanted to sell.
The architect for the building is the Durham-based Duda|Paine, a firm that also designed The Dillon tower in Raleigh.
Earlier this year, Fallon told The N&O that waiting to sign a tenant before construction would slow them down in a market that has become increasingly competitive.
“Going spec is purely a function of the fact that we want to get this project going,” Fallon told The N&O earlier this year. “We need the momentum and we want the momentum and we think that the risk-adjusted returns are worth it.”
He added on Thursday that he thinks the company has that momentum now and plans to use it to do more projects across Raleigh, Durham and Chapel Hill.