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Published: The News & Observer, January 26, 2001
Author:
Dudley Price; staff writer
Edition: Final
Section: Business
Empire Buys Another Building
RALEIGH -- One of downtown's largest developers is buying the historic
Alexander Building on Fayetteville Street Mall.
Greg Hatem of Empire Properties has contracted to buy the distinctive
sevenstory building, one of the oldest downtown, from First Union
bank. He declined to divulge the purchase price, but the building,
across the mall from First Union along Hargett Street, has a tax
value of $2.6 million.
"We think it's underutilized and has a lot more potential
than its current use," Hatem said.
The 35,000squarefoot office building is 20 percent vacant. Hatem
said empty space on the ground floor could be filled with office
or retail tenants.
Hatem said he didn't have any prospective tenants signed, but dropping
office vacancy rates and rising rental rates in the oncemoribund
downtown show that demand for space in the area is increasing. Office
buildings have become particularly hot properties in recent months.
In September, Cambridge, Mass.based Modern Continental Enterprises
paid $8.15 million for the 15story 333 Corporate Plaza building
on the 300 block of the mall. In October, the 17story One Hannover
Square, in the 400 block, was sold to an Atlantabased realestate
fund for about $45 million.
And last week, the city council rejected a proposal from Empire
Properties and Raleighbased Centre Group and sold the former Hudson
Belk department store building to Modern Continental for $2 million.
Empire wanted to convert the fourstory, 181,000squarefoot building,
which is adjacent to 333 Corporate Plaza, into hightech offices.
But the council favored Modern's proposal to turn the old store
into offices with a 12,600squarefoot Italian restaurant on the ground
floor.
Michael Williams, vice president of Karnes Research, which tracks
office vacancies in the Triangle, said demand for downtown office
space is increasing. In fall 1998, the office vacancy rate downtown
was 13.4 percent. By the fall of 2000, the rate was only 5.4 percent.
During the same time, the average rent climbed nearly $1.50 per
square foot to $17.45 per square foot.
"The vacancy rate has come down fairly steadily and slowly
because of mostly smalltenant activity and little or no construction
activity over the past year," Williams said, referring to many
small technology companies that have moved downtown.
Hatem said he was attracted to the Alexander Building by the Greek
Revival Ionic columns on its exterior and and the solid brass hand
rails on the sidewalk beside the building. Hatem said he was negotiating
to purchase the Alexander Building at the same time he was trying
to buy the old Belk store.
"I think it's a cool building," he said.
The building was constructed in 1907 as a Masonic Temple and was
the first structure in the state built from steel and reinforced
concrete. The top floor was used as a ballroom.
In later years, the building housed Land's Jewelers, which led
to it also being called the Land Building.
Another longtime tenant was Brantley's Drug Store, which was known
for its homemade ice cream and was operated by the father of RaleighDurham
International Airport's director, John Brantley. After more than
three decades, the drugstore moved to another location in 1947 and
went out of business in 1988.
Current tenants include law firms Cheshire Parker Schneider Wells
& Bryan, Hughes & Turner and The Edmisten & Webb Law
Firm as well as Vital Source Technologies.
The purchase will be the latest for Empire Properties, which is
rapidly becoming one of downtown's largest landlords.
In 1996, the firm bought an old CocaCola warehouse on West Street
and leased it to Jillian's nightclub. Since then, Empire has bought
a 40,000squarefoot building on the 300 block of Martin Street, which
has such tenants as iXL, an Internet services company, and Barefoot
Press.
Empire also has a 24,000squarefoot warehouse on Glenwood South,
a 3,000squarefoot warehouse on Bloodworth Street and a 10,000squarefoot
building opposite City Market on Blount Street. Only the Blount
Street building, which is being renovated, is vacant.
"Everything we do is buy unique properties," Hatem said.
"That's what attracted us to [the Alexander] building."
Photos:
Belk Building / sold january 2001
Map:
Medlin/Staff
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