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Published: The News & Observer, July 23, 2003
Author:
Dudley Price;
Staff Writer
Edition: Final
Section: News
Page: B3
Old building needs modern safety
RALEIGH -- The Commerce Building, one of downtown Raleigh's oldest
office buildings, is for sale, but potential buyers are balking
at its $3 million price tag.
The owner of the 79-year-old building at Hargett and Salisbury
streets already has rejected six offers.
"They were substantially lower than the asking price,"
said Ben Kilgore IV, first vice president at CB Richard Ellis, the
commercial real-estate firm that is selling the building for Carolina
First Bank of Greenville, S.C.
The bidders apparently have been put off by a city mandate that
by 2006 the old building be fitted with a new fire-control sprinkler
system, which could cost as much as $400,000.
"It's in pretty decent shape," Kilgore said of the building.
"The foyer was extensively redone within the last five years.
The location near Wachovia Capital Center is a positive, and I can
walk to any number of amenities: restaurants and, in particular,
it's near the courthouse."
But the new owner probably wouldn't be able to quickly recoup the
sprinkler cost because current lease rates of $11 to $12 per square
foot are equal to rates for similar Class B space available nearby.
Developer Greg Hatem of Empire Properties, one of downtown's biggest
landlords, said his offer of $1.55 million was rejected. He estimated
the building would need $750,000 in renovations in addition to the
sprinkler system.
"We'd love to buy the building and renovate it, but at a purchase
price near $3 million it would be impossible to buy it and bring
it up to current standards," Hatem said.
The current asking price for Commerce Place is $59.40 per square
foot. By contrast, two years earlier, Hatem purchased the Alexander
Building, a block away, for $53.60 per square foot.
The building was built in 1924 by the Odd Fellows Lodge, a fraternal
and philanthropic group, which held meetings on the top floors and
leased out the remaining space. The Odd Fellows sold the building
in 1981, and the name was changed to the Commerce Building.
The bank bought the historic building for $2.47 million in February
after lenders foreclosed on the previous owner, The Commerce Building
LLC.
The tax value of the 50,508-square-foot building and its land is
$2.95 million, according to Wake County real estate data. About
77 percent of the building is leased . On the ground floor is a
restaurant, Est Est Est Trattoria. Upper floors house offices of
The Charlotte Observer, Winston-Salem Journal and law firms such
as Morgan & Reeves, Anderson & Anderson and attorney Earle
R. Purser.
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