High-profile office tower off Raleigh’s Beltline will soon get new owners
One of Raleigh’s most prominent office towers along Six Forks Road and Interstate 440 is getting new owners.
Highwoods Properties announced this week that it plans to purchase the 20-story, 346,000-square-foot Advance Auto Parts tower at 4200 Six Forks Rd. for an undisclosed sum.
Amid record-high office vacancies — and a dearth of sales through much of 2024 — the transaction is a sign of life in an otherwise tough market. It also solidifies Highwood’s growing presence in North Hills’ revitalized Main District.
The Raleigh-based firm already owns the adjacent 16-story, 300,000-square-foot Captrust tower, which it acquired in 2021 for $142.5 million, Triangle Business Journal reported. Closer to downtown, its portfolio includes other high-profile buildings. Among them: 150 Fayetteville, PNC Plaza, One City Plaza and Charter Square.
“We’re excited to expand in the vibrant North Hills,” said Ted Klinck, Highwoods’ president and CEO, in a release. He added that the firm will fund the acquisition using proceeds from the recent sale of “non-core” assets in Tampa. (Highwoods sold an office campus to BayCare Health System for $145 million in February, Tampa Bay Business Journal reported.)
The transactions will “[add] to cash flows while increasing our growth rate and improving our portfolio quality,” Klinck said.
Developed by Houston-based Lionstone Investments, in partnership with Raleigh’s Kane Realty Corp., the building opened in 2020 and is currently “100% leased.” Tax records show the assessed value is around $100 million.
The tower is managed by Kane Realty and sits on the same parcel as the residential tower The Eastern, which is also managed by Kane Realty.
The seller, Ameriprise Financial, owns Lionstone Investments. It’s currently offloading about $5.5 billion in commercial real estate across the U.S. to focus on investing in the U.K. and Europe, CoStar News reported.
The acquisition is scheduled to close in the next 30 days.
Sales in a soft market
Advance Auto Parts tower is one of several office buildings to sell in recent months amid record vacancies and market uncertainty.
Plunging property values, high interest rates, the rise of hybrid work and weak tenant demand since the pandemic have pushed Triangle office vacancy to 21% — up from 20.6% in the previous quarter and from 18.9% a year ago, according to CBRE’s 2024 fourth-quarter market report, beating out records set in 1986 and 1991.
Sales stalled for much of 2024, but activity has started to pick up in recent months, said Elizabeth Gates, a CBRE Raleigh senior analyst. The uptick has been “driven by demand from both investors and tenants buying buildings for occupancy,” she said.
In the largest transaction, Easterly Government Properties purchased Crossroads I, II and III in Cary from Menlo Equities for $72.5 million ($246 per square foot) in late 2024, CBRE reported. The buildings are 100% leased with the majority of space occupied by the Wake County Public School System for 10 years.
A local investor paid Highwoods Properties $21.4 million ($125 per square foot) for a 170,102-square-foot building at 4800 Falls of Neuse Road in North Raleigh. The building was 75% leased at the time of sale.
Distressed sales are also on the rise.
In West Raleigh, Perkins Fund paid Bridge Commercial Real Estate $6 million ($37 per square foot) for Capital Center, 75% below the building’s assessed value of $24.4 million.
