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Durham developer bullish on Charlotte market

Local economic development types spend a lot of time wondering and worrying about how companies outside the Charlotte region view the business climate here.

As well they should. A positive business profile translates into more corporate relocations, more jobs and a broadened tax base. If Durham-based real estate investor Anthony Dilweg is any indication, the Queen City is looking pretty good.

Dilweg, a former quarterback for Duke University and the Green Bay Packers, makes his living these days as head of The Dilweg Cos., a full-service commercial real estate firm. He and his colleagues are betting big on Charlotte. Last week, their firm announced its purchase of 121 W. Trade St., a 32-story office tower formerly known as the Interstate Tower, for $59.6 million.

It was the biggest acquisition to date for the firm, founded in the late 1990s. It previously bought the SouthPark Center and the Park Abbey Building on Park Road.

With real estate markets continuing to rebound, the company says it is looking to invest millions more in Charlotte, Atlanta and Raleigh-Durham properties. I spoke recently with Dilweg, company President John Weigel and Executive Vice President Jeff Witek about the company’s interest in Charlotte. (Answers have been edited for clarity, and are Dilweg’s unless otherwise noted).

Q: What makes Charlotte an attractive place for your firm right now?

A: We spend a lot of time looking at certain submarkets, pulling them apart, primarily for the demographics and the fundamentals as well as the product stock. ... We’ve narrowed it down to three markets (Charlotte, Raleigh-Durham and Atlanta), primarily in the office sector. We think there’s a good opportunity to find high-quality assets, maybe the current ownership is dealing with a little bit of fatigue from during the downturn and would like to exit.

Q: Michael Smith of Charlotte Center City Partners and others say it’s time to build another office tower uptown. Do you sense such a need when you study the numbers on uptown’s office market?

A: Weigel: Unless they have a lot of money or a significant tenant, (developers) probably won’t start a spec building.

Dilweg: There seems to be a little more discipline in the Charlotte uptown market than our experience in Atlanta, for instance. When it comes to spec buildings or new buildings they have a tendency to be a little more aggressive there. There’s things coming out of the ground at a pace that really concerns you.

Q: How’d your firm make out during the turmoil of the past five years?

A: It was quite the experience. Our peers, some of them had to reposition and reinvent themselves. We played a lot of defense. For an offensive (-minded) guy, that was tough. The biggest takeaway to me was really embracing frequent and high-level communication with our lenders and our partners to let them know what’s going on and what we’re trying to do. Here’s where we’ve got to restructure, here’s where we’ve got to bite the bullet, or here we’ve got to defer dividends for a while.

Weigel: It really paid off to be aggressive and assertive with our lenders, and to go to them with ideas and suggestions. They were used to having to chase people down to get the keys. We were determined not to give any keys back.

Q: Do you sense a different feeling among banks and creditors now, after these years of recession-tightened lending?

A: We do. It’s been nice. It’s been refreshing. BB&T was a lender that stepped up during the downturn. We’ve developed a relationship, and they’ve been great. We’ve got some of the smaller regional banks now that have got some room, they’re coming out of it. So suddenly, we’ve now become very attractive.

Q: Any changes planned for 121 W. Trade under your ownership?

A: Witek: Just bringing some amenities to the building, bringing more of a concierge, boutique feel. You’ve got a lot of huge buildings on that corner. This one needs to have a point of difference.

Q: Any immediate plans to buy another Charlotte building?

A: We’re looking at a few, but we’re also mindful of our concentration in a market. You’d like to have some critical mass that you can build around.

Q: There’s a lot of talk in Charlotte about uncertainty around control of the airport. Does any of that play into the mind of an investor coming in from out of town?

A: We haven’t specifically looked at the airport. We look at the submarkets, so uptown, SouthPark and the University area are attractive to us. The biggest challenge for any operator is the way information trades these days. It trades pretty rapidly, and it kind of gets centered around the probability of things happening. And that’s a challenge in itself. You get as much information as you can and you hopefully make good decisions.

Q: You didn’t mention Ballantyne, the hot Charlotte office market of the moment.

A: That’s the reason. It’s hot. Getting too much attention. We try to find the outliers.