The sale price factors out to $213 per sf, the second highest for an office building in the Triangle, according to CB Richard Ellis Raleigh LLC, which exclusively repped the seller Colonnade Development LLC--a joint venture between DRA Advisors in New York and Spectrum Properties based here and in Charlotte. The CBRE team was led by Ben Kilgore, senior vice president in Raleigh, Will Yowell, executive vice president in Atlanta, Justin Parsonnet, first vice president in Atlanta, and Jay O'Meara, vice president in Atlanta.
"[Colonnade Development] decided to sell because of the state of the market right now," Kilgore tells GlobeSt.com. "Cap rates are low, there is a tremendous amount of capital out there and more of that capital is looking at secondary markets. The timing was right to sell this property."
Colonnade Development built Colonnade One in 2000. The property at 8540 Colonnade Dr. is a five-story, multi-tenant asset that was 100% occupied at the time of the sale. The tenant roster includes Wachovia Insurance, Bovis Lend Lease, Hatteras Investments, Onsport, Applied Research Associates, Inc. and Voyager Pharmaceuticals.
The only other office property that fetched a higher per sf price in the market traded at $290 per sf, Kilgore explains, and is occupied under a number of Duke University 15-year leases. "I'm not sure I would call it a multi-tenant building. [Colonnade One], in my opinion, is the highest per sf sale for a multi-tenant property in out market." And these two buildings may be the beginning of a trend. According to Kilgore, a third office building in the area recently sold for $195 per sf. "Those price-per-sf barriers of a couple of years ago don't exist anymore," he tells GlobeSt.com. "Interest rates are low, secondary markets are in vogue, and occupancy and vacancy rates in our market are improving. In 12 of the last 13 quarters we saw positive office absorption of 4.5 million feet."
The Raleigh market resurgence is also marked by a number of companies choosing to set up shop locally. Over the summer Fidelity announced it was moving 2,000 employees to the city and the Royal Bank of Canada just broke ground on its US headquarters Downtown, Kilgore says. "Good news is popping up here."
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