Charlottes once-bustling airport office district around West Tyvola Road, which has seen lackluster growth for more than a decade, could be on the cusp of a resurgence, brokers say.
For a time in the 1980s and 90s, that area was an epicenter of office leasing and corporate relocation, fueled by its available space, cheaper rents and proximity to Charlotte Douglas International Airport. The Charlotte Coliseum brought still more energy, drawing tens of thousands to Charlotte Hornets games and sellout concerts.
But vacancy rates rose in the early 2000s as developers built more office towers uptown and the Bissell Cos. created a new office park in Ballantyne. The Hornets left for New Orleans and the coliseum was imploded, the land sold to a developer.
Now, the airport office market, the citys second-largest by square footage, is seeing renewed signs of vigor.
Investors are buying buildings. Some large tenants have expanded or renewed leases. And work is finally under way at the former coliseum site where the land, slated for a large mixed-use project, sat dormant for nearly six years.
Among the recent highlights:
• Last year the real estate investment and management arm of Goldman Sachs Group Inc. bought seven buildings in LakePointe Office Park for $75 million. Starwood Capital Group purchased two buildings in LakePointe Corporate Center for $28 million. True North Management Group paid $34.6 million for the 13-building Vanguard Center office park.
• Dirt is moving at the former coliseum site on West Tyvola as construction starts on a 284-unit apartment complex expected to open in October. Sidewalks and other road improvements have been made. The property owner says it will look to develop retail this year.
• Last April, New Jersey-based Vision Equities and partner CarVal Investors paid $103 million for the six-building Coliseum Centre office park. The new owner boosted occupancy and recently announced it was buying more land so it could build new office space, between 150,000 square feet and 400,000 square feet.
• In December, Charlotte-based retailer Belk Inc. said it planned to lease about 50,000 square feet at Coliseum Centre and add 150 jobs to its existing 1,000 employees at the companys headquarters nearby on West Tyvola.
Longtime commercial real estate broker John Culbertson of Cardinal Real Estate Partners said things are moving in the right direction.
The area is poised for a resurgence, said Culbertson, who sold the coliseum site on behalf of the city. There are a lot of positive things that are happening there.
Near uptown and airport
Vision Equities managing partner Fred Arena had worked in the Charlotte office market for six years before buying Coliseum Centre.
A former managing director at Goldman Sachs, Arena said he liked the office park because of its quality buildings and proximity to uptown, highways and the airport.
He says he wasnt daunted by the areas nearly 30 percent vacancy rate. Brokers consider a 10 percent vacancy rate to be healthy. Arena says his research suggested the market was healthier for top-quality buildings such as those at Coliseum Centre.
During the 1980s and 1990s, Charlottes airport office market attracted the biggest share of the citys large corporate relocations and expansions due to its larger amounts of available new space and cheaper rents. Uptown at the time didnt have large contiguous amounts of office space, and such space was expensive and difficult to find in the SouthPark area.
Average rents for the market currently are roughly 20 percent less than those in Ballantyne.
Located on 66 acres at Tyvola Road and Billy Graham Parkway and near the site of the former coliseum, the Coliseum Centre office park was developed by Crescent Resources in the 1990s. Tenants include Compass Group, LPL Financial and United Technologies Corp., formerly Goodrich Corp., which last year expanded by 80,000 square feet to occupy an entire 199,000-square-foot building.
Compass Group has been a tenant for nearly 20 years and recently signed a 12-year lease extension.
In 2010, with its lease set to expire in 2013, the food service company explored several options, including a move elsewhere within the Charlotte area, said spokeswoman Cheryl Queen.
After a thorough review, we ultimately decided that remaining on our current space provided the optimal solution, she said. In addition to making economic sense, we were able to find solutions for our most pressing needs, including the addition of a parking deck, additional office space and a budget for tenant improvements.
Arena wants to build on the centers success and is buying an adjacent 27 acres from developer Pope & Land Enterprises. Arena has hired Lincoln Harris to market plans for a build-to-suit office project. With such a project, tenants can shape a buildings construction to meet their needs. Plans allow for 150,000 square feet to 400,000 square feet. Arena said he believes his build-to-suit project can help recruit companies from the Northeast.
Campbell Walker and Marshall Williamson with Lincoln Harris are pitching the project to employers both in and outside the Charlotte market.
Williamson said they believe more companies are becoming confident enough in the economy to commit to a move.
Its about finding the right company with strong leadership to make long-term commitments, he said.
If the new office space is built, it would mark the first new major office construction in the airport office market since the second quarter of 2011, when Highwoods Property built a 150,100-square-foot building for the FBI, according to research by Charlotte-based Karnes.
Prior to that, no office space had been built in that area since 2008.
Karnes analyst Andrew Jenkins said its smart to get ahead of demand and make property available for tenants.
We have a lot of investors now looking at this market and saying it is going to grow and lease up space, he said. They dont want to be out of the running when companies are considering places in the region.
Old coliseum site abuzz
Next to the Coliseum Centre sits the site of the demolished Charlotte Coliseum, which is once again humming with construction noise.
For years, a weathered green trailer with a banner advertising City Park stood largely alone on the site along West Tyvola. Now, cement trucks, construction workers and cranes are working on a new apartment complex.
Atlanta-based Pope & Land Enterprises paid $23.4 million for the 150-acre site in 2006, near the height of the real estate market.
The site is zoned for up to 200,000 square feet of retail development, up to 400,000 square feet of office space, two hotels, more than 1,000 for-sale residential units and 1,410 apartments.
Besides the apartments that are being built by Atlanta-based Oxford Properties, a developer is eyeing the site for a possible hotel, said Mason Zimmerman, senior vice president with Pope & Land. Zimmerman, who wouldnt name the developer, said a new traffic light should be installed by the end of the year. The firm also is adding parks, jogging trails and sidewalks to connect the project with the Charlotte Regional Farmers Market and manicured office parks.
There is momentum, Zimmerman said. And were encouraged by it.