$318 million sale of Lowe’s office tower in South End sets a record in Charlotte
.jpg "About 2,000 employees will be hired to work at Lowe’s tech center hub office at Design Center Tower at 100 W. Worthington Ave. in South End.")
The $318 million sale last month of the prominent Lowe’s tower in South End set a new office space record in Charlotte, signaling confidence in the market despite impacts from the global coronavirus pandemic.
At 357,526 square feet, the tower at 100 W. Worthington Ave. went for $889 per square foot, county property records show. The sale beats out The RailYard in South End, which sold last year for $201 million, or $612 a square foot.
What’s more, the Lowe’s sale was well over triple the price for typical office space square footage in Charlotte.
“It’s a testament to the strength of not only Charlotte but also South End and the conviction investors have that the market will continue to be strong even as we come out of the pandemic,” said Ryan Clutter, senior managing director with JLL. JLL represented the sellers, Childress Klein Properties Inc. and Ram Realty Advisors.
The 23-story Lowe’s tower received just under 20 offers, including from international investors, Clutter said. It was listed for sale in early November.
According to county records, the building was sold Nov. 22 to an affiliate of New York-based Apollo Global Management.
Corner turned
The average price per square foot for office space in Charlotte is about $250, with higher end offices selling for around $500, said Chuck McShane, director of market analytics for the Carolinas at CoStar Group, a real estate research firm.
The five-story, 107,000-square-foot Refinery office building on West Morehead Street, for example, sold this year for $55.25 million, or roughly $500 per square foot. The new 26-story Ally tower in uptown sold for $390 million, also about $500 per square foot, McShane said.
The purchase of the Lowe’s tower follows what was already one of the strongest quarters for office deals in Charlotte’s history, McShane said.
Between July, August and September, there was $1.5 billion in office sales closed, the largest quarterly sales volume on record, not adjusted for inflation, he said.
“There’s definitely some headwinds in the Charlotte office market, but there’s been a corner turned in the last quarter,” McShane said.
The strong third quarter also comes as office vacancies are at some of their highest rates in years. The rate is about 12%, McShane said. That’s partly due to a shift to work from home during the coronavirus pandemic but also because new office towers that broke ground before the pandemic are now completed.
Tech hub comes to Charlotte
In 2019, Lowe’s announced it had selected Charlotte for a 2,000-employee global tech hub.
The company’s sign went up on the building in early August, but a decision to bring employees back to the office has been delayed until 2022, the Observer has previously reported.
Since Lowe’s leases space in the building, any potential sale will not impact the company’s plans to have workers there, company spokesman Steve Salazar told the Observer earlier this month. Lowe’s has a 15-year lease on the building.
