Developer wants to tear down Cary office building. See what they want to build instead
Amid record-high office vacancies, a developer wants to tear down an underutilized, decades-old commercial building in Cary for much-needed housing. But first, it needs the city’s approval.
Raleigh-based Highwoods Properties has proposed rezoning the three-story, 79,434-square-foot office building, also known as Highwoods Center, at 7001 Weston Parkway, next to Lake Crabtree.
The firm seeks to amend the land’s use for a multifamily or townhome development up to four stories.
The rezoning request was first reported by the Triangle Business Journal.
“The market has changed. Our challenge was, what’s the best use for this?” said Skip Hill, senior vice president and Raleigh market lead for Highwoods, in a video call. In today’s environment, office buildings without walkable amenities are “becoming extinct,” he added.
“To attract employees to the office, they must be in neighborhoods or mixed-use parks and commute worthy. This building does not have [that].”
With Cary’s growing population (up 28.4% since 2010 to 180,010, according to census data), Highwinds decided to respond to the town’s “demand for housing.”
“It’s better to go residential, where you have you can add life and people,” Hill said.
Built in 1998, Highwoods Center stands alone on 8.7 acres inside the Weston District, a mix of residential, commercial and office buildings anchored by mortgage lender Pennymac and Centregreen Cafe. It has a total assessed value of about $15.2 million, according to property records.
Proposed plans would bring housing along Weston Parkway and include “pedestrian connections to surrounding properties,” the application says. It would also provide “an appropriate transition” between the existing single-family neighborhood to the south and the office uses in the area.
The current tenant, Railinc, has leased roughly 60,000 square feet of space for the last 20 years. It’s slated to move out in April 2025.
The rezoning is expected to be complete in the second quarter of 2025, Hill said. Highwoods will then either sell or partner with a multi-family company to develop the property.
“We don’t know yet exactly. It depends on market conditions,” Hill said.
In 2012, the firm teamed up with Northwood Ravin to rezone an office tract for residential around the corner. They developed two adjacent high-end apartment projects: Lofts at Weston at 2101 Lakeside Lofts Cir. and Weston Lakeside Apartments at 1017 Umstead Hollow Pl., both in Cary.
A bleak office market
Both nationally and in the Triangle, commercial real estate is hurting.
In Raleigh-Durham, direct vacancy rose to 17.4%, according to CBRE’s 2024 third-quarter market report. That’s up .9 percentage points for the quarter and 3.1 points (from 14.3%) year-over-year.
Overall vacancy rose to 20.6%, up .8 percentage points for the quarter and 1.8 points year-over-year.
“While a recovery is expected to be protracted due to structural shifts in occupancy trends, overall fundamentals should begin heading in a more positive direction in 2025,” said CBRE’s senior research analyst Elizabeth Gates in the report.
Amid the region’s long-running housing shortage, Raleigh officials and developers have discussed converting empty office space to housing. But most experts argue it’s not easy or financially viable.
This story was originally published November 23, 2024 at 7:30 AM.
