Durham company buys historic downtown Raleigh Capital Club building for $12.5 million
The historic Capital Club building in downtown Raleigh, which has been on the corner of West Martin and South Salisbury streets since 1929, has been sold for $12.5 million.
It’s the first Raleigh office market investment for Hem + Spire, a 4-year-old Durham company whose portfolio includes older and historic downtown Durham properties like the old BB&T bank building and The Snow Building.
“The Raleigh and Durham markets are cohesively married to one another and the historic architecture and story of The Capital Club Building that is so deeply rooted in Raleigh’s downtown culture in a natural extension of our current portfolio,” said Maxwell Joseph, Hem + Spire founder and a 2015 Duke graduate.
Hem + Spire will operate the almost 56,000-square-foot, 12-story building for its tenants, which include the HQ Raleigh coworking space on five floors and the Capital Club 16 restaurant that anchors the building.
“We look at two aspects of the building,” Joseph said. “Revitalizing the existing features, not altering the facade in any way but reinvigorating the architectural elements that have made it compelling for so many years.”
Hem + Spire now owns more than 150,000 square feet of commercial real estate in Raleigh and Durham. Joseph said the company will invest about $750,000 early next year into indoor building improvements, remodeling interiors and adding resources for tenants.
Leasing for available office space, which Joseph said is around 87% occupied, will be available along with lease rates by the end of the year.
Wake County records show that the previous owner had purchased the building for $7.4 million in 2016. Joseph said he thought the building was worth $5.1 million more than that today because of the upgrades the previous owners made, the higher occupancy — it was 40% in 2016, he said — and the number of new developments planned nearby.
According to commercial real estate services firm JLL, asking rents for Class B office space in Downtown Raleigh average $25 per square foot.
The Capital Club building is across from the future site of The Nexus, a planned condo, office and apartment tower complex on the former site of The News & Observer in front of Nash Square.
Real estate services firm Cushman & Wakefield arranged the sale. They announced the same week the $13.7 million of a new Chapel Hill office building in the Meadowmont mixed-use development.
According to recent JLL Raleigh-Durham office market data, the overall vacancy rate for office space is 10.2% and the vacancy rate for Class B space is 12%. JLL reports that 2.6 million square feet of office space is currently under development in the market.
This story was originally published November 27, 2019 at 3:18 PM.
