OFFERING MEMORANDUM CHARLOTTE, NC
A | Investment Summary
Exclusive Marketing Agents RYAN CLUTTER Executive Vice President CBRE | Capital Markets 750 9th Street, NW Suite 900 Washington DC 20001 T (202) 585.5643 F (202) 783.1723 ryan.clutter@cbre.com
B | Investment Summary
Financing Contacts PATRICK GILDEA Senior Associate CBRE | Capital Markets 201 South College Street Suite 1700 Charlotte, NC 28244 T (704) 331.1217 F (704) 331.1259 patrick.gildea@cbre.com
COMPIE NEWMAN Senior Vice President CBRE | Capital Markets 201 South College Street Suite 1700 Charlotte, NC 28244 T (704) 927.1454 F (704) 334.0939 compie.newman@cbre.com
HAL KEMPSON First Vice President CBRE | Capital Markets 201 South College St Suite 1700 Charlotte, NC 28244 T (704) 927.1453 F (704) 334.0939 hal.kempson@cbre.com
Investment Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Property Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Tenant Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Financial Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Charlotte Economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Charlotte Office Market Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Investment Summary
Introduction & Overview CBRE, on behalf of the “Owner”, is pleased to present to a select group of investors the opportunity to acquire 121 West Trade (the “Property”), located in the Downtown submarket of Charlotte, North Carolina. The Property is currently 72.13% occupied. Constructed in 1990, 121 West Trade is a 329,930 square foot, 32-story class “A” office building. The building is positioned on a fully utilized 0.4751 acre parcel at the intersection of Trade and Tryon Streets, the “Main and Main” of downtown Charlotte. The classic architecture of 121 West Trade, including the building’s distinctive green rooftop, has been a favorite on the Charlotte skyline. 121 West Trade has pedestrian access from both the Trade Street and Tryon Street sides of the building, while vehicular access to the building’s 267-space parking garage is provided through driveways located on West Fourth Street (ingress only) and West Trade Street (egress only). The Property is located across Tryon Street from Bank of America’s world headquarters, three blocks from the East Coast headquarters of Wells Fargo, and five blocks from Duke Energy’s world headquarters. On-site building amenities include a deli, a barber shop, an on-site parking garage, and the Charlotte City Club. Additionally, the building is positioned two blocks away from the CTC Lynx light rail station and the Charlotte Transit Center bus station. The Property is also in close proximity to the Blumenthal Performing Arts Center, Founders Hall Shops, the historic Dunhill Hotel, Ritz Carlton Hotel, Marriott Hotel, Aloft Hotel, Omni Hotel, and numerous other retail and entertainment amenities. 121 West Trade is being offered without a stated asking price and is available on an “all cash” basis under the following terms: Projected Year 1 NOI:...................................................... $ 3,088,648 Projected 5 Year Average NOI:..........................................$ 5,304,975 Projected 10 Year Average NOI:........................................$ 6,089,710 Projected 5 Year Average Operating Cash Flow:..................$ 3,740,560 Projected 10 Year Average Operating Cash Flow:.................$4,828,628
1 | Investment Summary
ASSET HIGHLIGHTS
MARKET HIGHLIGHTS
•
Core-Plus Investment Opportunity
•
Second Largest U.S. Financial Center
•
Quality Tenant Roster
•
Charlotte’s Resilient Local Economy
•
Recent Sizeable Downtown Office Leases
•
Projected Employment Growth for Charlotte
•
Lack of Large Blocks of Space in Downtown Charlotte
Surpasses Overall U.S. Projections
•
Opportunity to Purchase an Ideally Located
•
Historically One of the Tightest CBDs in the Country
Asset well below Replacement Cost
•
Rapidly Becoming a Leader in the Energy Sector
•
Well Positioned in the Center of Charlotte’s CBD
•
Since 2009 Downtown Charlotte has Secured a
•
Located in Close Proximity to Transportation Center
Global Headquarters for a Fortune 1000 Firm and
LYNX Light Rail Station
Regional Headquarters for Three Fortune 500 Companies
Asset Highlights CORE-PLUS INVESTMENT OPPORTUNITY
The 121 West Trade offering provides an investor the opportunity
list illustrates the robust demand for large blocks of space in the
for near-term yield enhancement though leasing the existing
Downtown submarket. The relocation of Chiquita to NASCAR Plaza,
vacant space. With 27.87 % of the building currently vacant,
Charlotte School of Law to Charlotte Plaza, and Babson Capital to
and improving market conditions, it is estimated that the existing
the Duke Energy Center are prime examples of significant leasing
vacancy will be absorbed in 18 months, thereby increasing
momentum within the submarket. As the market continues to witness
the NOI by more than 25% in a relatively short period of time.
renewed demand and occupancies increase, rental rates are
According to CBRE Economic Advisors, rental rates are projected
expected to escalate as the supply dwindles to pre-recession levels.
to grow by 3.5% in 2013 and 4% in 2014. Through leasing the 2012 LEASES IN THE DOWNTOWN SUBMARKET GREATER THAN 10,000 SQUARE FEET
existing vacancy and renewing existing tenants at higher rates significant upside will be achieved.
Building
Tenant
QUALITY TENANT ROSTER
Duke Energy Center
Wells Fargo
300,000
121 West Trade features an impressive list of local, regional and
Charlotte Plaza
Charlotte School of Law
243,083
Bank of America Plaza
SCOR Global American Life
140,000
NASCAR Plaza
Chiquita
137,790
Gateway Center
Charlotte School of Law
42,000
& Iron), SAS Institute, Inc., HNTB Corporation, Open Systems
Duke Energy Center
Babson Capital
35,244
Technologies, and Compuware Corporation. As the economy
Charlotte Plaza
CBRE
23,860
improves over the next two years, 121 West Trade will continue to
NASCAR Plaza
NASCAR
22,588
attract quality tenants. Existing full floor vacancies on floors 10,
Ally Center
Navigant Consulting
16,959
24 and 25 will draw significant attention in the leasing market
Johnston Building
Montreat College
15,000
NASCAR Plaza
NASCAR
12,691
525 N Tryon
Embrace
12,078
NASCAR Plaza
Heels.com
11,100
national tenants. Several of the tenants have occupied space for multiple lease terms and, in the case of Caudle & Spears, have been located at the building since it was constructed. Nationally recognized tenants include The Shaw Group (Chicago Bridge
as large blocks of space are being absorbed rapidly in the Downtown submarket. As these conditions offer very favorable investment fundamentals, 121 West Trade will enjoy consistently high occupancies, high retention, favorable lease terms, and attractive rent growth well into the future ensuring quality returns.
Square Feet
LACK OF LARGE BLOCKS OF SPACE IN DOWNTOWN CHARLOTTE
As leasing has gained momentum in the Downtown submarket,
RECENT SIZABLE DOWNTOWN OFFICE LEASES
Over the past five years, the Charlotte market has witnessed
large blocks of consolidated vacant space have been absorbed
several
for
quickly. Currently, there are four buildings in downtown Charlotte
companies looking to relocate to the city or significantly
with consolidated blocks of vacant space above 30,000 square
expand their operations within Charlotte. With adequate
feet available. These vacancies are on the 15th floor or higher
vacant space to accommodate large tenants, 121 West Trade
and total 227,044 square feet, which equates to 15.4% of all
will compete favorably until the existing space
is absorbed.
vacant space in the submarket. Additionally, at $28.04 per square
Furthermore, with the demand witnessed in 2012, it’s likely the
foot, the average rental rate for the aforementioned buildings is
space will be leased quickly should an existing tenant vacate.
13.5% higher than the average rental rates at 121 West Trade.
high-profile,
large-scale,
office
requirements
Considering the lack of supply for large blocks of space, coupled Despite the fact that some of the large leases executed in the
with the significant discount to its competition, it’s anticipated that
Downtown submarket in 2012 are larger in size than what 121
the three full floor vacancies at 121 West Trade will be absorbed
West Trade could currently accommodate, the accompanying
over the next 12 to 18 months.
Investment Summary | 2
OPPORTUNITY TO PURCHASE AN IDEALLY LOCATED ASSET WELL BELOW REPLACEMENT COST
With estimated replacement costs of $350 to $375 per square foot, and very limited opportunities for new CBD office supply, the offering represents an excellent value for an investor seeking upside. Furthermore, all four corners of the Trade and Tryon intersection are occupied by office towers; the opportunity to acquire one of these four assets at an attractive basis is a once
WELL POSITIONED IN THE CENTER OF CHARLOTTE’S CBD
121 West Trade’s location in the heart of downtown Charlotte, and two blocks west of the CTC Station for the LYNX light rail line (with additional rail lines planned), provides convenient access to most of downtown Charlotte’s amenities and attractions. Some of the nearby amenities include: •
within two blocks of the property
in a generation opportunity. EXCEPTIONALLY WELL-MAINTAINED ASSET WITH THE INVESTMENT OF SIGNIFICANT CAPITAL INTO THE BUILDING
•
common with institutional owners, the asset has been operated
EpiCentre provides a number of restaurant options, as well as a movie theater, bowling alley, and an Aloft Hotel. •
Westin, Hilton Center City, Hilton Garden Inn, Hampton
West Trade is in pristine condition and will only require normal
Inn, the Holiday Inn, aLoft, the Omni, and Hyatt House.
maintenance to remain a market-leading facility for class “A” •
LOCATED IN CLOSE PROXIMITY TO TRANSPORTATION CENTER LYNX LIGHT RAIL STATION
A key benefit of 121 West Trade’s location is its proximity to the
•
The Property is also located approximately three blocks northwest of the Time Warner Cable Arena, home to the NBA’s Charlotte Bobcats.
•
Bank of America Corporate Center (headquarters building) is diagonally across Tryon Street to the east.
Transportation Center LYNX station, located two blocks to the east. Additionally, the Third Street/Convention Center Station is
Spirit Square Center for the Arts and the Discovery Place Space Center are three blocks north.
require minimal to low capital reserve requirements over the next several years therefore helping to increase yields.
Hotels within walking distance include the Marriott Center City, The Ritz-Carlton, the Dunhill, Courtyard Center City,
at above market standards. As a high quality office tower, 121
tenants. The excellent condition of the building and its systems will
Charlotte’s largest retail destination in the CBD, The EpiCentre, is two blocks east on College Street. The
Institutionally owned and operated since completion in 1990, 121 West Trade has been exceptionally well-maintained. As is
Over 100 restaurants are within walking distance, 25
•
Located five blocks south of the Property is the Levine
four blocks south of the Property. Currently there are 15 stations in
Center for the Arts. This cultural campus is comprised
the system, which carries an average of over 15,500 passenger
of The Knight Theatre, The Bechtler Museum of Modern
trips every day, surpassing the 9,100 riders forecasted for 2011.
Art, Mint Museum Uptown, and the Harvey B. Gantt
Planned rail extensions to the Northeast, Charlotte Douglas
Center for African-American Arts & Culture.
International Airport, and the commuter rail to Lake Norman will make multimodal rail access even more important in the future.
3 | Investment Summary
Investment Summary | 4
Market Highlights SECOND LARGEST U.S. FINANCIAL CENTER
Charlotte is second only to New York City in housing financial
Maersk, a global leader in the shipping industry, maintains its
and banking operations in the U.S. Bank of America, the country’s
headquarters and a significant operation in Charlotte.
second largest bank with $2.2 trillion in assets, is headquartered in Charlotte. Charlotte also houses the East Region headquarters
With low operating costs, limited risk for natural disaster, and a
of Wells Fargo. The former GMAC Financial Services, now Ally
central East Coast location, the Charlotte region has amassed
Bank, recently relocated key operations to downtown Charlotte.
a significant concentration of data centers. There are over four
Similarly, Fifth Third Bank opened a sizeable regional office in
million square feet of internet and enterprise data centers in
downtown Charlotte. Charlotte has been resilient and is recovering
North Carolina, and about 60% of that space is in the Charlotte
earlier than many expected and will likely maintain its position as
region. Additionally, over 1.8 million square of data center
a major city for financial services well into the future.
space is under construction in North Carolina. Apple, Google,
CHARLOTTE’S REBOUNDING LOCAL ECONOMY
Charlotte is known for its ability to weather a recession better than most cities. However, the most recent recession, which impacted the financial sector more than ever before, had many doubting Charlotte’s ability to recover. Nevertheless, Charlotte continued to receive good news during the downturn as over 10,000 new jobs were announced in the span of a few months. Many of these new jobs are related to the emerging energy sector, which now is emblematic of Charlotte’s focus on economic diversity. With the critical mass from Fortune 500 energy giant, Duke Energy, Charlotte has become focused on changing its “banking only” reputation and actively embraces previously under-recognized, traditional employment sectors such as healthcare, manufacturing, and logistics. An example of this diversification is Maersk Line.
5 | Investment Summary
Facebook, AT&T, Disney, and American Express all operate data centers in the Charlotte region. As data centers become more critical, especially with Cloud based technologies, the Charlotte region will likely attract additional data centers and related support further diversifying the local economy. Since July of 2009 the Charlotte market has experienced significant new job announcements. A list of the companies looking to add a minimum of 100 new jobs is listed to the right. With employment increasing by more than 18,850 for the MSA during 2010, more than 18,900 in 2011, and more than 17,300 throughout 2012, it’s clear that many of the announced jobs have been filled. This trend is expected to continue with increasing momentum throughout the remainder of 2013 and into 2014 as the overall local economy, especially the energy sector, is poised for growth.
Company
Number of Jobs
Industry
Convergys
1,600
Technical Support / Call Center
MetLife
1,300
Insurance & Financial Services
Connextions Inc.
1,200
Healthcare – Billing Support / Call Center
Red Ventures
1,000
Direct Marketing
Siemens Energy
825
Electrical Engineering; Energy
Electrolux
738
Manufacturer – Appliances
Freightliner
628
Manufacturer – Hybrid & Natural Gas Trucks
RATO North America
600
Manufacturer – Small Gas Engines
Capgemini
550
Consulting; Technology & Outsourcing Services
Fifth Third Bank
500
Banking
Hewitt Associates
463
Consulting - Human Resources
Ally Bank
420
Banking; Finance
Chiquita Brands International
400
Agriculture - Importing of Foods
Bell Lines, Inc.
400
Logistics - Trucking
Red Cross
400
Public Service
United Technologies
325
Aerospace Engineering
Premier, Inc.
300
Healthcare
XPO Logistics
287
Transportation-Logistics Services
Citco Fund
258
Hedge Fund
Shaw Power
225
Energy Engineering; Nuclear Power
Celgard
209
Manufacturer – Battery Parts for Electric Cars
SPX
180
Engineered Products & Technologies
Saertex
178
Technologically Advanced Textiles
BAE Systems
176
Human Resources - Payroll & Accounting
HVM, LLC Management Company
170
Headquarters of Extended Stay Hotels
Husqvarna
160
Manufacturer – Outdoor/Yard Power Equipment
Novant
150
Healthcare
Webvisible
150
Marketing; Technology
Talon Systems
150
Manufacturer – Furniture
FCR Recycling
150
Recycling
ICM, Inc.
145
Energy - Gasifier Technology
Jeld-Wen
141
N. American Headquarters - Door & Window Manufacturing
Mitsubishi
135
Nuclear Energy Systems
Driven Brands
131
Auto Repair Franchising
Fluor Corporation
100
Engineering
100
Energy; High-Voltage Cables / Power Transmission
ABB, Inc. Total:
14,844
Investment Summary | 6
PROJECTED EMPLOYMENT GROWTH, CHARLOTTE SURPASSES THE OVERALL U.S.
According to Economy.com’s fourth quarter 2012 Charlotte MSA report, the Charlotte market is expected to outperform the overall U.S. in job growth over the next four years. Average annual employment growth is projected to be 2.5% for Charlotte and 2.1% for the U.S. As mentioned above, the Charlotte job market is becoming more diverse. Cautious expansion in the financial sector, coupled with growth above the U.S. average in other industries, led to modest job growth in 2011 and 2012. Economy.com is projecting positive job growth for the Charlotte MSA through 2016. The graph below illustrates the projected growth of national employment versus Charlotte.
PERCENT CHANGE IN EMPLOYMENT
6% 4% 2% 0% (2%) (4%) (6%) (8%)
2005
2006
2007
2008
Source: Moody’s Economy.com
2009
2010
2011
2012
2013
Charlotte Employment Growth
2014
2015
2016
U.S. Employment Growth
HISTORICALLY ONE OF THE TIGHTEST CBDS IN THE COUNTRY
Historically, downtown Charlotte has operated at low vacancy levels as its large corporate citizens have frequently leased large portions of space. In the late ‘90s and into the 2000’s, tremendous growth pushed the vacancy rate down to 1.1% in the second quarter of 2008. While the vacancy rate increased in 2009, 2010 and 2011, the trend reversed course in 2012, and the vacancy rate decreased to the present rate of 9.4%. The job growth projections indicate the Downtown submarket will continue to improve over the next three years. Downtown vacancy is expected to decline from the current 9.4% with increased positive absorption expected throughout the remainder of 2013 and into 2014. Charlotte’s inherent competitive advantages described above, and the cost to construct new office buildings, will shift the supply/demand equation to the advantage of existing owners. DOWNTOWN CHARLOTTE VACANCY
12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
7 | Investment Summary
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
RAPIDLY BECOMING A LEADER IN THE ENERGY SECTOR
Duke Energy anchors Charlotte’s energy sector. In July of 2012,
materials used in blades for the wind turbine industry) and
Duke Energy finalized its merger with Raleigh, NC based Progress
Celgard, LLC (rechargeable lithium-ion batteries) are some of the
Energy. Duke Energy, which continues to maintain its headquarters
more high-profile Charlotte “green energy ” firms. The “green
in Charlotte, now serves more than 7.1 million customers and is the
energy” companies and the energy sector as a whole benefit from
nation’s largest utility provider, based on the number of customers,
the training and educational resources available within the region.
servicing six regulated territories – North Carolina, South Carolina,
Among these are: University of North Carolina Charlotte’s Energy
Florida, Indiana, Kentucky and Ohio.
Production and Infrastructure Center, The Electric Power Research Institute (EPRI), and Central Piedmont Community College’s
More than 550 firms in the Charlotte area provide energy and
extensive offerings of energy related technical course work.
technical expertise. An example of this is Charlotte based Piedmont Natural Gas Company, a leader in the natural gas industry.
SINCE 2009 DOWNTOWN CHARLOTTE HAS SECURED A GLOBAL
Piedmont serves over one million customers in North Carolina, South
HEADQUARTERS FOR A FORTUNE 1000 FIRM AND A REGIONAL
Carolina and Tennessee. Together the headquarters operations
HEADQUARTERS FOR THREE FORTUNE 500 COMPANIES
of Duke Energy and Piedmont Natural Gas have been attracting
With a deep and diverse labor force within the financial services
additional energy related companies to Charlotte for decades.
sector, and an excellent transportation hub, and lower cost housing than most Northern markets, Charlotte offers an exceptional
Along with the utilities, other energy industry leading firms such
location for financial institutions to expand or relocate. Since
as The Shaw Group (tenant at 121 West Trade), AREVA NP,
2008, three large financial institutions opened their Southeastern
Toshiba, Westinghouse, Fluor, Siemens and URS have helped
hubs in downtown Charlotte. Ally Bank, the namesake tenant
Charlotte to become a center for engineering and design as it
of 440 South Church Street, opened their Southeastern hub in
relates to the energy industry.
2010. BB&T, based in Winston-Salem, North Carolina, recently expanded their large downtown presence, and Fifth Third Bank
Charlotte is also home for a number of energy related manufacturing
recently relocated its Southeastern headquarters to Charlotte.
operations including CoaLogix, SPX (Headquartered in Charlotte), Siemens, Strategic Power Systems, Inc. (SPS), and VA Tech Hydro
Chiquita Brands relocated their corporate headquarters to
USA Corporation. These engineering and manufacturing firms act
Charlotte from Cincinnati, OH and now occupy approximately
as a magnet to attract additional energy related companies.
137,000 square feet in the NASCAR Plaza building, which has been branded with Chiquita signage. Chiquita is a Fortune 1000
Although Charlotte has a history of attracting companies in the
company that expands the food industry’s presence in the local
energy sector, the recent interest in alternative or “green energy”
economy and further rounds out the impressive list of corporate
has raised the city’s national visibility in this sector. Sencera
citizens in downtown Charlotte.
International Corporation (solar), Saertex USA (composite
Investment Summary | 8
Property Overview
ADDRESS
121 West Trade Street, Charlotte, North Carolina 28202 YEAR CONSTRUCTED
1990 TAX PARCEL
073-01-126
shear walls form the elevator and stairway core. The shear walls are 12" reinforced concrete walls that extend from the ground level to level 35. The dome roof is framed with structural steel beams to support the dome metal pan roof and louvers. Wind Load Resistance Design is based on 80 mile-per-hour winds for glass. EXTERIOR
LAND AREA
The exterior walls consist of etched limestone and precast concrete
0.4751 Acres
panels with accent panels of gray, green and black granite on
OVERVIEW
32-Story, class “A” office building NET RENTABLE AREA
329,930 Square Feet
the lower level entrances. From the office levels 10-32 additional aluminum curtain wall with insulated tinted glass are installed at the center portion of each elevation. On the upper mechanical levels 33 and 34 and the cooling tower, the façade is insulated metal panels installed on structural steel framing.
ACCESS
ROOF
Pedestrian access to the building is provided through doors
The building features a modified bitumen aggregate roofing
fronting West Trade Street and the plaza which faces South Tryon
membrane applied over the concrete structural slab, with a
Street. Vehicular access to the building is from West 4th Street
protection board and precast concrete pavers 2' x 2' x 2" thick.
through an access drive between the adjacent building and its parking deck. Automobile traffic enters the parking garage ramp
ELEVATORS
through a parking gate. Parking is provided on parking levels 2
The building is served by nine (9) Otis, gearless passenger
through 9 within the building. Egress from the building is provided
elevators, one (1) Otis, gearless service elevator and one (1) Otis,
from the exit ramp to the sidewalk at West Trade Street.
basement traction passenger elevator for the garage area. The elevator cabs have marble floors with bronze doors, frames and
FOUNDATION
interior trim. The passenger elevators, for the office areas, have
The perimeter of the building is founded on poured concrete
interior wood panels over bronze trim. The passenger elevator
caissons, ranging in size from 36" to 54" diameter. The caisson
cabs are 63" deep by 77" wide with center-opening, 48" wide
design is based on allowable bearing pressure of 150 tons per
by 84" high doors. The garage elevators have plastic laminate
square foot. The caissons extend to level 1, where reinforced
panels over bronze trim. The service elevator has stainless steel
concrete footings are provided for exterior concrete walls and
interior finishes with stainless steel diamond-plate flooring.
slabs-on-grade. The basement level is approximately 12' below the 1st floor level, and is used for mechanical space and storage.
The four (4) passenger elevators in the low-rise bank are 3,500 lbs. capacity at 700 FPM. The five (5) passenger elevators in the high-
STRUCTURE
rise bank are also 3,500 lbs. capacity and 1,000 FPM. The service
The typical floor has reinforced concrete perimeter and interior
elevator is rated 4,000 lbs. at 500 FPM. The garage/passenger
beams, with poured-in-place concrete deck, with rib beams
elevator for levels P2 through P9 is rated at 2,500 lbs. at 350 FPM.
spaced approximately 8' apart. The beams and ramps in the parking garage from level 2 through level 9 have post tension
The operating and signal systems for the low-rise and high-rise
cables in the 14" x 6" wide ribs. The post-tensioned cables are
bank are Otis Elevonic 401 for 4-plex variable voltage. The
tied to the shear wall beams at the center of the building, and to
service elevator and passenger elevator for the parking garage
the exterior edge of the slab. At the office areas, levels 10 through
are Otis Elevonic Simplex variable voltage units.
35 have similar construction, with a typical 5" slab. The interior
11 | Property Overview
HVAC
The typical office floor has a 16,000 CFM air handling unit with
Each tenant office floor has a separate HVAC room with the air
20 HP supply fans with 2,000 CFM outside air. The cooling coil in
handling unit and supply ductwork. Tenant spaces include additional
the air handling unit range from 450,000 BTU to approximately
VAV boxes, power induction boxes and fan units with electric heat
520,000 BTU. The office air handling units are provided with a
coils for perimeter heating. The perimeter heating on each floor is
cooling coil based on 56 to 65 GPM chilled water with a face
broken down into eight (8) separate zones with thermostat control.
velocity of 500 FPM. On the ground floor, a separate 3,000 CFM air handling unit providing with 2,000 CFM outside air and
The original HVAC system was installed in 1990 with pneumatic
243,000 BTU cooling. Two (2) additional ground floor air handling
valve controls of chilled water piping valves and control
units are provided for the two (2) tenant areas. A separate 16,000
dampers. The building automation system has been upgraded
CFM is provided in the mechanical room at level 32.
in 1999 with the Andover Energy Management System controls for chillers and air handlers.
Chilled water for the air handling units is provided from three (3), 495-ton chillers located at the mechanical room on level 32. Each
ELECTRICITY
chiller is provided with an 870 GPM, 7-/12 HP, primary chilled
Main power comes into the transformer vault located under
water pump and a 1,495 GPM, 30-HP condenser water pump to
the loading dock. Primary high voltage service is run from the
the cooling tower. There are two (2) secondary chilled water pumps
basement to the level 33 electrical room to two 3,750 KVA
each 2,000 GPM, 50-HP units. On the tenant floors, auxiliary
switchgears and disconnects. The level 33 electrical room has
condenser water is provided at each office level within the core.
individual switchgear to provide 208 volt buss duct drops and
The auxiliary condenser water system has two (2), 40-HP pumps
480-volt buss duct drops through each electrical closet in the
rated at 970 GPM each. This condenser water is used for tenant
core. Each office floor has 208/480 volt service to provide tenant
terminal units and power induction boxes within the tenant space.
power and lighting requirements.
The chilled water loop has a plate heat exchanger located on the upper mechanical floor to provide an economizer cycle. The plate
A 1,000 KW Caterpillar emergency generator is provided in
heat exchanger is based on 1,500 GPM chilled water and 1,622
the loading dock area. The emergency generator provides
GPM condenser water. Additional self-contained water-cooled units
emergency power to all life safety lighting, smoke and elevator
are provided in the basement and parking garage core areas for
pressurization fans and to two (2) elevators for firemen control
additional cooling. The mechanical room on level 33 also has two
during an alarm event.
(2) 6,000 CFM, self-contained units providing 182,000 BTU cooling.
Property Overview | 12
INTERIOR FINISHES
Lobby – The main lobby has a combination of green, white
pressure. The fire system has Fire Department connections at the
and black marble flooring with similar marble on the sidewalls
loading dock and in front of the building. The building is provided
abutting the bronze storefront entrances. The main lobby
with a fire pump for the parking garage and first ten (10) floors of
provides access to retail spaces and a center, circular elevator
office space. The second fire pump provides pressure for the high-
court for access to the two (2) banks of elevators to the office
rise portion of the building for office levels 20 through 32 and the
and the parking garage elevators. The elevator lobbies have
penthouses. The fire pumps are each rated at 125 HP and 750 GPM.
similar finishes with a barrel vault ceiling with painted gypsum board and fluorescent soffit lighting.
SECURITY
Common Areas & Corridors – The common area walls are
day, 7 days a week. Card readers are provided in the elevator
painted or vinyl coated gypsum board. The ceiling system is 2’
to provide after hours access. The security center in the lobby
x 2’ lay-in acoustic tiles with recessed fluorescent lighting.
monitors cameras located in the freight elevator, loading dock and
Restrooms – Each office floor has a men's and women's restroom
The main lobby has a security desk which is manned 24-hours a
lobby areas and parking garage.
which has 2x2 ceramic tile flooring and walls with acoustical
PARKING
drop ceilings. The typical restrooms have granite counter tops
The parking garage is located on levels 2 through 9 in the
with three (3) or four (4) under-counter mounted sinks and dual
building. The parking garage totals 267 spaces for a parking
handle faucets. Each restroom has a handicap stall with grab
ratio of 0.81 per 1,000 rentable square feet.
bars. Painted metal ceiling-hung partitions are installed in each
LOADING DOCKS
restroom. Tenant Spaces – The standard tenant space has painted gypsum board walls, carpeted flooring and 2’ x 2’ lay-in ceiling tiles with 2’ x 2’ recessed fluorescent light fixtures. FIRE & LIFE SAFETY
The building is fully sprinklered with a wet system in the office and common areas and a dry system in the parking garage. Main service enters the building at the basement and fire pumps provide additional
13 | Property Overview
The Property is serviced by a loading dock which is accessible through the parking garage entrance. ZONING
UMUD-Uptown Mixed Use District
Property Overview | 14
121 West Trade Site Plan WEST FOURTH STREET
PARKING DECK
SOUTH TRYON STREET
SOUTH CHURCH STREET
note: not part of offering
WEST TRADE STREET
15 | Investment Summary
Investment Summary | 16
Tenant Summary
Shaw Facilities, Inc. (Chicago Bridge & Iron) Square Feet:
117,395
Suites:
1150, 1200, 1400, 1500, 1600, 1700, 1850 & 2900
Lease Expiration:
February 2018
Website:
www.cbi.com
Ticker Symbol:
CBI (NYSE)
Chicago Bridge and Iron Company NV (CB&I) is an integrated engineering, procurement and construction service provider and process technology licensor, delivering solutions to customers primarily in the energy and natural resource industries. CB&I provides conceptual design, technology, engineering, procurement, fabrication, construction and commissioning services. CB&I has three segments: CB&I Steel Plate Structures, CB&I Lummus, and Lummus Technology. The Company offers a portfolio of gas processing, refining and petrochemical technologies. On February 13, 2013, the Company completed its acquisition of The Shaw Group Inc. The acquisition of The Shaw Group Inc. adds technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation, and facilities management to CB&I’s array of services. The company’s power facilities segment, the tenant at 121 West Trade, provides a range of services, including design, engineering, procurement, and construction (EPC), technology, and consulting services primarily to the fossil and nuclear power generation industries; and Plant Services segment offers electric power refueling outage maintenance, turnaround maintenance, routine maintenance, offshore maintenance, modifications, capital construction, off-site modularization, fabrication, reliability engineering, plant engineering, plant support, and specialty services, as well as predictive and preventive maintenance services.
Faison & Associates Square Feet:
18,595
Suites:
2700 & 3030
Lease Expiration:
November 2013
Website:
www.faison.com
Faison & Associates is a privately-owned real estate investment company that oversees properties valued in excess of $1.5 billion. Headquartered in Charlotte, NC, Faison & Associates is active throughout the Southeast, Mid-Atlantic and Northeast regions. Founded in the 1960’s, the company has been operating for more than 50 years. The company’s development focus is in the retail, multifamily, office, and residential lot segments. Faison has developed more than 40 million square feet of retail, residential and commercial property. In addition to development, Faison & Associates provides property and portfolio management, leasing services, and operates an investment properties division. Since 1994 the company has acquired more than $1.4 billion of office, retail and multi-family residential properties.
19 | Tenant Summary
The Charlotte City Club Square Feet:
18,471
Suites:
3060, 3100 & BUTCH
Lease Expiration:
November 2020
Website:
www.charlottecityclub.com
The Charlotte City Club provides a private club setting for social and business activities coupled with fine and casual dining in an elegant setting. The Club's location on the top two floors of the 121 West Trade building gives Members and guests an unparalleled view of Charlotte and the surrounding areas. It also offers convenient parking in the building's garage. Members of the club can reserve the upper level for private parties ranging from 10 to 150 guests, while the main floor can accommodate larger events. Membership provides reciprocal guest privileges at more than 350 clubs across the United States and abroad. An affiliation with nearby Charlotte Athletic Club gives City Club Members an athletic club option and an affiliation with the Verdict Ridge Country Club, River Run Golf and Country Club, River Hills Country Club, Firethorne Country Club, High Meadows Golf and Country Club, Asheville Country Club and the Dunes Golf and Beach Club offers the opportunity for golf on some of the area's most preferred courses.
Tenant Summary | 20
SAS Institute, Inc. Square Feet:
12,213
Suite:
2200
Lease Expiration:
September 2018
Website:
www.sas.com
SAS Institute, Inc. provides business analytics software and services. It offers solutions in the areas of business analytics, business intelligence, customer intelligence, financial intelligence, foundation tools, fraud and security intelligence, high-performance analytics, human capital intelligence, information management, IT and CIO enablement, OnDemand solutions, performance management, risk management, supply chain intelligence, and sustainability management, as well as governance, risk, and compliance. The company serves various industries, including casinos, communications, education, financial services, government, health insurance, health care providers, hotels, insurance, life sciences, manufacturing, media, oil and gas, retail, travel and transportation, utilities, and SAS solutions for small to medium businesses in the United States and internationally. SAS Institute Inc. was founded in 1976 and is headquartered in Cary, North Carolina.
21 | Tenant Summary
Caudle & Spears, P.A. Square Feet:
9,278
Suite:
2600
Lease Expiration:
March 2019
Website:
www.caudlespears.com
Caudle & Spears, P.A., located in Charlotte, North Carolina since 1973, is a full service law firm for small to mid-sized businesses and business owners. The firm represents clients in a variety of legal matters, including civil litigation, business planning and corporate formations, real estate transactions, landlord/tenant matters, tax and estate planning, and personal injury. The firm is active throughout North and South Carolina. Specialties: • Business Planning & Employment Law • Landlord-Tenant Law • Commercial and Civil Litigation • Tax, Trust and Estate Planning
Brookwood Associates, LLC Square Feet:
6,678
Suite:
3000
Lease Expiration:
June 2016
Website:
www.brookwoodassociates.com
Brookwood Associates is a boutique investment banking firm that provides financial advisory and consulting services to middle-market companies. The firm offers mergers and acquisition, sales advisory, business valuation, negotiation, divesture, institutional private placement of equity, mezzanine debt and senior debt, recapitalization, and restructuring consulting services. Additionally, it provides due diligence, private transactions, fairness opinions, bankruptcy, and strategic advisory services. Brookwood Associates, LLC was founded in 1989 and is based in Atlanta, Georgia with an additional office located at the Property.
• Industry Experience: • Business Services • Consumer Products • Food and Agribusiness • Healthcare • Manufacturing • Paper and Packaging • Restaurants • Specialty Retail • Technology and Telecommunications • Wholesale Distribution
Tenant Summary | 22
23 | Tenant Summary
121 West Trade Stacking Plan Square Feet
Lease Term End
16,510
Nov-2020
Charlotte City Club, Inc. (Office)
1,476
Nov-2020
Management Office
1,800
Suite 3030
Faison Enterprises, Inc.
2,047
Suite 3000
Brookwood Associates, LLC
6,678
Jun-2016
Suite 2900
Shaw I
13,280
Oct-2013
Suite 2850
Langford de Kock LLP
6,536
Jul-2018
Suite 2800
Available
8,905
Suite 2700
Faison Enterprises, Inc.
16,548
Nov-3013
Suite 2650
Open Systems Technologies
2,721
May-2014
Suite 2610
Available
2,808
Suite 2600
Caudle & Spears, P.A.
961
Mar-2019
Suite 2600
Caudle & Spears, P.A.
9,278
Mar-2019
Suite 2500
Available
15,601
Suite 2400
Available
16,548
Suite 2350
Natural Resources Group, LLC
2,786
Apr-2015
Suite 2300
Compuware Corporation
5,104
Dec-2015
Suite 2300
Available
7,626
Suite 2250
Available
2,792
Suite 2200
SAS Institute, Inc.
12,213
Suite 2175
Available
5,279
Suite 2150
Computer Tech Solutions, Inc.
3,893
Suite 2125
Available
2,488
Suite 2100
Lead Vision, LLC
3,517
Aug-2017
Suite 2075
HNTB Corporation
1,186
May-2016
Suite 2050
HNTB Corporation
3,450
May-2016
Suite 2020
Technology Project Management
5,063
Mar-2018
Suite 2000
Available
4,803
Suite 1975
PB Americas, Inc.
1,857
May-16
Suite 1950
PB Americas, Inc.
6,101
May-16
Suite 1900
Available (NuTech Solutions, Inc.)
7,243
Jun-13
Suite 1850
Shaw III
9,079
Feb-18
Suite 1800
Fidus Partners, LLC
Suite 1700
Shaw III
Suite 1600 Suite 1500
Suite
Tenant
Suite 3100
Charlotte City Club, Inc. (Restaurant)
Suite 3060 Suite 3050
Nov-2013
Sep-2018 Jan-2015
7,137
Jun-2013
16,216
Feb-2018
Shaw II
16,216
Feb-2018
Shaw I
15,688
Feb-2018
Suite 1400
Shaw I
16,216
Feb-2018
Suite 1200
Shaw I
16,216
Feb-2018
Suite 1150
Shaw II
14,484
Feb-2018
Suite 1100
Available
1,732
Suite 1000
Available
16,142
Suite 150
The Sandwich Club
2,059
Suite 100
The Cut Rock n Roll Barbershop
1,162
Feb-2017
485
Nov-2020
Total Occupied
237,963
72.13%
Total Available
91,967
27,87%
329,930
100.00%
Charlotte City Club, Inc. ("Butcher Space") Basement
Total
2012
2017
2013
2018
2014
2019
2015
2020
2016
Available
Oct-2014
Tenant Summary | 24
25 | Investment Summary
Suite 1500
Shaw I
Suite 1400
Shaw I
Suite 1200
Shaw I
Suite 1150
Shaw II
Suite 1100
Available
Suite 1000
Available
Suite 150
The Sandwich Club
Suite 100
15,688
16,216
16,216
14,484
1,732
16,142
2,059
Feet
1,162
The Cut Rock n Roll Barbershop
Square
Suite
Rent Roll
4.75%
4.91%
4.91%
4.39%
0.52%
4.89%
0.62%
0.35%
of Building
Pro-rata
Feb-2008
Feb-2008
Feb-2008
Apr-2008
Apr-2009
Oct-2009
Begin
End
Feb-2018
Feb-2018
Feb-2018
Feb-2018
Oct-2014
Feb-2017
Lease Term
$2,767
Mar-2016
Mar-2017
Mar-2017
$42,797 $44,080
Mar-2016 Mar-2017
$39,024 $40,201 $41,403 $42,645
Mar-2014 Mar-2015 Mar-2016 Mar-2017
$37,887
$41,554
Mar-2015
Current
$40,337
Mar-2014
$39,162
$44,080
Mar-2016
Current
$41,554 $42,797
Mar-2015
$40,337
Mar-2014
$39,162
$39,372
Mar-2016
Current
$37,115 $38,226
Mar-2015
$36,029
$34,979
$3,789
Mar-2014
Current
Nov-2013
$3,696
$2,706
Mar-2015
Current
$2,646
$2,588
Monthly
Mar-2014
Current
Begin
Rental Increases
$511,743
$496,839
$482,406
$468,287
$454,638
$528,966
$513,561
$498,642
$484,048
$469,940
$528,966
$513,561
$498,642
$484,048
$469,940
$472,468
$458,708
$445,383
$432,347
$419,746
$45,463
$44,351
$33,198
$32,466
$31,757
$31,060
Annually
Rental Rates PSF
$32.62
$31.67
$30.75
$29.85
$28.98
$32.62
$31.67
$30.75
$29.85
$28.98
$32.62
$31.67
$30.75
$29.85
$28.98
$32.62
$31.67
$30.75
$29.85
$28.98
$22.08
$21.54
$28.57
$27.94
$27.33
$26.73
2007 Base Stop GU 95%
2007 Base Stop GU 95%
2007 Base Stop GU 95%
2007 Base Stop GU 95%
Net GU 95%
Net GU 95%
Recovery Type
Comments/Options
Six percent (6%) of Tenant's gross sales in excess of $650K. 1, 5 year renewal option; 9 months notice required.
2, 3 year renewal options; 9 months notice required.
Investment Summary | 26
Suite
Suite 2020
Technology Project Management
Suite 2000
Available
Suite 1975
PB Americas, Inc.
Suite 1950
PB Americas, Inc.
Suite 1900
Available (NuTech Solutions, Inc.)
Suite 1850
Shaw III
Suite 1800
Fidus Partners, LLC
Suite 1700
Shaw III
Suite 1600
Shaw II
5,063
4,803
1,857
6,101
7,243
9,079
7,137
16,216
1.53%
1.46%
0.56%
1.85%
2.20%
2.75%
2.16%
4.91%
4.91%
of Building
Feet
16,216
Pro-rata
Square
Oct-2012
Feb-2013
May-2005
Jul-2005
Sep-2008
Nov-2007
Aug-2008
Apr-2008
Begin
End
Mar-2018
May-2016
May-2016
Jun-2013
Feb-2018
Jun-2013
Feb-2018
Feb-2018
Lease Term Monthly
$42,797 $44,080
Mar-2016 Mar-2017
$42,797 $44,080
Mar-2016 Mar-2017
$23,961 $24,680
Mar-2016 Mar-2017
$3,901.25
Jan-2016
$9,839 $10,084 $10,337 $10,594 $10,860
Oct-2013 Oct-2014 Oct-2015 Oct-2016 Oct-2017
$9,599
$3,788.28
Jan-2015
Current
$3,676.86
Jan-2014
$3,570.08
$12,817
Jan-2016 Current
$12,446
Jan-2015
$11,729 $12,085
Jan-2014
Current
$13,768
$23,265
Current
$22,584
Mar-2015
$21,926
Mar-2014
Current
$16,486
$41,554
Mar-2015
Current
$40,337
Mar-2014
$39,162
$41,554
Current
$40,337
Mar-2015
$39,162
Mar-2014
Current
Begin
Rental Increases
$130,322
$127,132
$124,044
$121,006
$118,069
$115,183
$46,815
$45,459
$44,122
$42,841
$153,806
$149,352
$145,021
$140,750
$165,213
$296,157
$287,532
$279,179
$271,008
$263,109
$197,838
$528,966
$513,561
$498,642
$484,048
$469,940
$528,966
$513,561
$498,642
$484,048
$469,940
Annually
Rental Rates PSF
$25.74
$25.11
$24.50
$23.90
$23.32
$22.75
$25.21
$24.48
$23.76
$23.07
$25.21
$24.48
$23.77
$23.07
$22.81
$32.62
$31.67
$30.75
$29.85
$28.98
$27.72
$32.62
$31.67
$30.75
$29.85
$28.98
$32.62
$31.67
$30.75
$29.85
$28.98
2012 Base Stop GU 95%
2011 Base Stop GU 95%
2011 Base Stop GU 95%
2005 Base Stop GU 95%
2007 Base Stop GU 95%
2007 Base Stop GU 95%
2007 Base Stop GU 95%
2007 Base Stop GU 95%
Recovery Type
1, 5 year renewal option at current market rate; 9 months notice required. Right of First Offer to lease Suite 2000 (4,803 SF) as it becomes available.
Tenant has vacated; space is available for sublease.
Tenant has the right to give back the 18th floor on 11/1/2015. Tenant must provide notice by 11/1/2014. Tenant must pay four (4) months of then current rent and any unamortized TI's and commission at nine percent (9%).
Tenant is currently talking with the current owner about plans after lease expiration; TBD.
Comments/Options
27 | Investment Summary
Suite 2300
Compuware Corporation
Suite 2300
Available
Suite 2250
Available
Suite 2200
SAS Institute, Inc.
Suite 2175
Available
Suite 2150
Computer Tech Solutions, Inc.
Suite 2125
Available
Suite 2100
Lead Vision, LLC
Suite 2075
HNTB Corporation
Suite 2050
HNTB Corporation
Suite
5,104
7,626
2,792
12,213
5,279
3,893
2,488
3,517
1,186
3,450
Feet
Square
1.55%
2.31%
0.85%
3.70%
1.60%
1.18%
0.75%
1.07%
0.36%
1.05%
of Building
Pro-rata
Jul-2004
Aug-2006
Dec-2011
Jul-2012
Feb-2008
Sep-2004
Begin
End
Dec-2015
Sep-2018
Jan-2015
Aug-2017
May-2016
May-2016
Lease Term
$7,251
Mar-2016
$2,493
Mar-2016
Aug-2016
$23,235 $23,591 $23,958
Oct-2015 Oct-2016 Oct-2017
$9,868 $10,038 $10,208
Jul-2013 Jul-2014 Jul-2015
$9,698
$22,879
Oct-2014
Current
$22,543
Oct-2013
$22,207
$7,634
Dec-2014
Current
$7,449
Dec-2013
$7,267
$6,955
Aug-2015
Apr-2013
$6,621 $6,785
Aug-2014
$6,460
Aug-2013
$6,301
$2,425
Mar-2015
Current
$2,361
Mar-2014
$2,298
$7,055
Mar-2015
Current
$6,868
$6,684
Monthly
Mar-2014
Current
Begin
Rental Increases
$122,496
$120,454
$118,413
$116,371
$287,494
$283,097
$278,823
$274,548
$270,518
$266,488
$91,602
$89,383
$87,203
$83,458
$81,419
$79,449
$77,515
$75,616
$29,911
$29,104
$28,334
$27,575
$87,009
$84,663
$82,421
$80,213
Annually
Rental Rates PSF
$24.00
$23.60
$23.20
$22.80
$23.54
$23.18
$22.83
$22.48
$22.15
$21.82
$23.53
$22.96
$22.40
$23.73
$23.15
$22.59
$22.04
$21.50
$25.22
$24.54
$23.89
$23.25
$25.22
$24.54
$23.89
$23.25
2011 Base Stop GU 95%
2012 Base Stop GU 95%
2011 Base Stop GU 95%
2012 Base Stop GU 95%
2008 Base Stop GU 95%
2004 Base Stop GU 95%
Recovery Type
Comments/Options
2, 3 renewal options; 9 months notice required.. Right of First Offer to lease any or any portion of offer space as it becomes available.
Five percent (5%) cap on controllable expenses. Tenant has the Option to Terminate lease effective 9/30/16 with 12 months notice and payment of the unamortized cost of all brokerage commissions and legal fees, and the Extension Term cost TI at the rate of eight percent (8%). Right of First Offer to lease any space on the 22nd floor that is contiguous to the premises.
One, five-year Renewal Option at current market rate; nine months notice required.
One, three-year Renewal1, 3 year renewal option at FMR; 9 months notice required. ROFO on suite 2000, consisting of 4,803 rsf as it becomes available. Tenant has Termination Option on this windowless portion of space effective either 2/28/14 or 2/28/15; 90 days notice and fee equal to one month of base rent, costs of any demising work, and unamortized costs.
1, 3 year renewal option at fair market rate; 9 months notice required. Right of First Offer on Suite 2000 (4,803 SF) as it becomes available.
Investment Summary | 28
Suite 2800
Available
Suite 2700
Faison Enterprises, Inc.
Suite 2650
Open Systems Technologies
2610
Available
Suite 2600
Caudle & Spears, P.A.
Suite 2600
Caudle & Spears, P.A.
Suite 2500
Available
Suite 2400
Available
8,905
16,548
2,721
2,808
961
9,278
15,601
16,548
Natural Resources Group, LLC
Suite 2350
Feet
2,786
Suite
Square
2.70%
5.02%
0.82%
0.85%
0.29%
2.81%
4.73%
5.02%
0.84%
of Building
Pro-rata
Dec-2009
Mar-2011
Jun-2013
Feb-1991
May-2006
Begin
End
Nov-3013
May-2014
Mar-2019
Mar-2019
Apr-2015
Lease Term
$20,587 $21,462 $22,374 $23,325
Apr-2015 Apr-2016 Apr-2017 Apr-2018
$2,223 $2,318 $2,416
Apr-2015 Apr-2016 Apr-2017 Apr-2018
Current
Mar-2014
$32,186
$5,451
$5,292
$2,133
Apr-2014
Current
$0 $2,045
Nov-2013
$1,962
$19,748
Apr-2014
Current
$0
Nov-2013
$18,943
$5,437
Nov-2014
Current
$5,305
$5,175
Monthly
Nov-2013
Current
Begin
Rental Increases
$386,230
$65,413
$63,508
$28,993
$27,811
$26,677
$25,591
$24,544
$0
$23,545
$279,899
$268,488
$257,542
$247,043
$236,972
$0
$227,431
$65,248
$63,660
$62,100
Annually
Rental Rates PSF
$23.34
$24.04
$23.34
$30.17
$28.94
$27.76
$26.63
$25.54
$0.00
$24.50
$30.17
$28.94
$27.76
$26.63
$25.54
$0.00
$24.51
$23.42
$22.85
$22.29
2009 Base Stop GU 95%
2011 Base Stop GU 95%
Full Service
Full Service
2012 Base Stop GU 95%
Recovery Type
Comments/Options
Commencement date is an estimate. One, five-year Renewal Option effective 4/1/19 at current market rate; nine months notice required.
One, five-year Renewal Option effective 4/1/19 at current market rate; nine months notice required. Tenant has a $12/SF tenant improvement allowancethat they have not fully used; any unused allowance will be credited to the buyer at closing.
5% cap on expenses. 1, 2 year renewal option and then a 1, 5 year renewal option. One time right to terminate lease effective 4/30/14 with 180 days notice and a fee of $13,803.89.
29 | Investment Summary
237,963
91,967
329,930
Total Occupied
Total Available
Total
Basement
100.00%
27.87%
72.13%
0.15%
485
Charlotte City Club, Inc. ("Butcher Space")
Suite 3100
5.00%
0.45%
0.55%
0.62%
2.02%
16,510
1,476
1,800
2,047
6,678
4.03%
1.98%
of Building
Pro-rata
Charlotte City Club, Inc. (Restaurant)
Suite 3060
Charlotte City Club, Inc. (Office)
Suite 3050
Management Office
Suite 3030
Faison Enterprises, Inc.
Suite 3000
Brookwood Associates, LLC
Suit 2900
Shaw I
13,280
6,536
Langford de Kock LLP
Suite 2850
Feet
Suite
Square
Jan-1992
Dec-2003
Mar-2010
Dec-2011
Nov-2010
Feb-2008
Dec-2005
Begin
End
Nov-2020
Nov-2020
Nov-2020
Nov-2013
Jun-2016
Oct-2013
Jul-2018
Lease Term
$167,583 $172,158
$13,965 $14,347 $14,744
Jun-2017 Jun-2018
Nov-2015
$44,250
$3,598 $3,688 $3,780
Mar-2019 Mar-2020
Current
$202
$16,923
$42,110 $43,173
$3,509
Mar-2017 Mar-2018
Current
$41,092
Mar-2016
$2,425
$203,073
$45,357
$40,088
$3,341 $3,424
Mar-2015
$39,114
$38,155
$3,260
$3,180
$47,777
$160,272
$157,601
$154,930
$152,258
$415,664
$176,930
Mar-2014
Current
$3,981
$13,133 $13,356
Nov-2014
Current
$12,911
$12,688
Nov-2013
Current
$34,639
$163,073
$13,589
Jun-2015 Jun-3016
Current
$158,694
Jun-2014
$154,446
$12,870 $13,225
Aug-2013
$0
$0
Annually
$0
$0
Monthly
Rental Rates
Mar-2013
Current
Begin
Rental Increases
$5.00
$12.30
$30.73
$29.98
$29.25
$28.53
$27.84
$27.16
$26.50
$25.85
$23.34
$24.00
$23.60
$23.20
$22.80
$31.30
$27.07
$26.34
$25.64
$24.95
$24.28
$23.63
$0.00
$0.00
PSF
Full Service
Net GU 95%
2010 Base Stop GU 95%
2009 Base Stop GU 95%
2011 Base Stop GU 95%
2007 Base Stop GU 95%
2012 Base Stop GU 95%
Recovery Type
2, 5 year renewal options at current market rate; 6 months notice required. 3/1/15 - 7/1/15 - Landlord shall make available to Tenant an improvement allowance of $14,760, which may only be applied to renovations for the office premises.
Valuation assumes that this will remain the management office.
Five percent (5%) cap on expenses (excludes utilities, security, snow removal, insurance, taxes). One-time option to terminate lease effective 4/1/14; notice due by 10/31/13, with the fee paid to Landlord by 1/31/14. The Fee is equal to two months rent plus the sum of the unamortized portion of all leasing costs. Tenant has the option to expand space; notice due by 6/30/13.
Tenant has exercised Termination Option for this space.
1, 5 year renewal option at FMR; 12 months notice required. Right of second offer to lease the remainder of suite 2810.
Comments/Options
Investment Summary | 30
Financial Analysis
Method of Analysis The following cash flow projection is based upon current lease information and assumptions regarding future occupancy, operating expenses, and revenues. The analysis period begins as of July 1, 2013. Both contractual lease terms for existing leases and anticipated lease terms for future lease contracts are projected over a ten-year analysis period. For all current vacancies, or upon expiration of a lease, a market rent is assigned to the space upon commencement of a new lease. The market rent is established for 2013 and increased by the rental growth rate on an annual basis during the analysis period. The assumptions for market rents, tenant improvements, and leasing commissions are based upon current market activity and lease transactions completed at the property and in the submarket. The attached cash flow projections have been prepared by CBRE using Argus software and incorporating appropriate assumptions that are detailed in the Table of Assumptions on the following pages. The projections set forth in this Offering Memorandum do not constitute a representation, warranty or guaranty by CBRE or the Owner of any of the numbers set forth herein or of any economic value attributable to the Property or income that may be derived there from.
33 | Financial Analysis
Summary of Financial Assumptions GLOBAL
SECOND GENERATION LEASING
Analysis Period
75%
Retention Ratio
Commencement Date
July 1, 2013
End Date
June 30, 2023
Annual Market Rent - Office (FL 10 - 20)
$23.50 PSF
10 Years
Annual Market Rent - Office (FL 21 - 32)
$25.00 PSF
Annual Market Rent - Retail
$25.00 PSF
Annual Market Rent - Basement
$10.00 PSF
Term Area Measures Building Square Footage (RSF)
7 Years
Lease Term
329,930 SF 5.00%
Vacancy and Credit Loss [1]
2.50% Annually
Rent Adjustment REVENUES Market Rent Growth
Base Stop
Expense Recovery Type - Retail
Net
3.00%
2019 -
3.00%
2015 -
4.50%
2020 -
3.00%
New
2016 -
5.50%
2021 -
3.00%
Renewal
2017 -
4.50%
2022 -
3.00%
Weighted Average
2018 -
3.00%
2023 + -
3.00%
Initial Tenant Improvements
2.50%
EXPENSES
Operating Expenses
2.50%
Capital Reserves
2.50%
Property Taxes
1.50%
Taxes Reassessed upon Sale [2] Management Fee (% of EGR) [4] Operating Expense Source [5]
$25.00 PSF $7.00 PSF $11.50 PSF
Commissions
Growth Rates
Capital Reserves
Expense Recovery Type - Office
2014 -
Parking Rent Growth [3] -
$15.00 PSF
Annual Market Rent - Charlotte City Club
No 2.50% 2013 Budget $0.15 PSF
New
6.00%
Renewal
3.00%
Weighted Average
3.75%
Downtime
6 Month(s)
Rental Abatement [6]
7 Month(s)
VACANT SPACE LEASING 91,967 SF
Total Vacant as of July 1, 2013
18 Month(s)
Absorption Period [7]
7 Years
Lease Term Initial Annual Market Rent
Same as Above Base Stop
Expense Recovery Type Rent Adjustment
2.50% Annually $25.00 PSF
Tenant Improvements
6.00%
Commission
7 Month(s)
Rental Abatement [6]
[1]
General Vacancy Loss factor includes attributes to projected lease-up, rollover downtime, and fixturing downtime. Shaw and SAS Institute, Inc. are excluded from the vacancy and credit loss.
[2] CBRE encourages investors to perform their own due diligence regarding tax legislation in Charlotte, NC and its potential impact on future tax assessments. The number used in the analysis is based off the Seller’s 2013 Budget. [3]
The current Parking Agreement is March 1, 2013 to February 28, 2014, with automatic one (1) year terms, unless sooner terminated. For purpose of this valuation, it is assumed that agreement will be renegotiated annually and the rent will increase by 2.5% per year.
[4]
The valuation assumes that going forward the parking deck income will be 2.50% of the effective gross revenue excluding the parking deck income.
[5]
Operating expenses are based of the Seller’s 2013 Budget. Owner related/non-reimbursable expenses were excluded from the valuation.
[6]
Seven (7) months abatement is outside of the lease term and is only for available office space in the first 18 months of the valuation.
[7] The entire Charlotte market had 1,090,149 rsf of net absorption in 2012 (194,840 sf in the CBD) which ended the year with a vacancy rate of 9.40% for the CBD and few large blocks of space remaining. Office building owners can continue to expect a steady improvement in occupancy. The 91,967 RSF of vacant space is assumed to be leased up in the first 18 months of the valuation.
Financial Analysis | 34
35 | Financial Analysis FY 2014
301,920
2,400
1,380
Parking Revenue
Tenant Work Orders
Other Misc.
(644,172)
Utilities
($0.43)
(223,992)
(149,724)
Administrative
$9.36
3,486,525
0 (3,258,425) (169,777)
$0.00 ($9.88) ($0.51)
City Club Refurbishment Allowance
TOTAL CAPITAL COSTS
OPERATING CASH FLOW
(50,109)
(1,039,832)
($3.15) ($0.15)
Capital Reserve
(2,168,484)
3,088,648
(2,876,568)
(141,520)
(226,786)
(59,588)
(693,316)
(280,055)
(1,410)
(669,162)
(545,930)
(258,801)
5,965,216
Leasing Commissions
($6.57)
($8.72)
(2,837,688)
($0.18)
Tenant Improvements
CAPITAL COSTS
NET OPERATING INCOME
Total Operating Expenses
Management Fee
($0.69)
(58,848)
Insurance
($2.10)
(688,164)
Real Estate Taxes
($0.85)
(276,600)
($0.00)
($2.03)
($1.65)
Security
(1,392)
(539,184)
Repairs and Maintenance
Roads & Grounds
(255,612)
Cleaning
($0.78)
$0.00 $18.08
0
6,324,213
0
1,398
2,430
304,436
104,611
226,963
5,325,378
($1,047,419)
5,965,216
General Vacancy
EXPENSES
$8,294,381 ($1,921,584)
$18.08
$0.00
$0.01
$0.92
$0.32
$0.69
EFFECTIVE GROSS REVENUE
6,324,213
103,320
Utility Reimbursement
Total Potential Gross Revenue
212,892
Expense Reimbursement Revenue
Base Rent Abatements
Total Scheduled Base Rent
$16.14
($3.17)
(117,051)
5,702,301
Absorption & Turnover Vacancy
$25.14 ($5.82)
8,241,360
(2,422,008)
Base Rental Revenue
Scheduled Base Rent
$/SF/Year
3,390,663
(1,448,419)
(14,760)
(51,362)
(453,628)
(928,669)
4,839,082
(3,034,463)
(189,038)
(232,458)
(61,076)
(703,714)
(287,059)
(1,445)
(734,829)
(559,576)
(265,268)
7,873,545
0
7,873,545
1,431
2,490
312,048
107,228
295,938
7,154,410
($1,005,130)
($348,511)
$8,508,051
95.90%
76.71%
Physical Occupancy
In-place
84.09%
64.20%
Overall Economic Occupancy
REVENUES
Jun-2015
Jun-2014
Fiscal Year Ending Jun-30
Cash Flow Projections
5,925,803
(211,742)
0
(52,644)
(62,228)
(96,870)
6,137,545
(3,142,616)
(224,007)
(238,267)
(62,602)
(714,271)
(294,234)
(1,480)
(762,289)
(573,566)
(271,900)
9,280,161
(225,539)
9,505,700
1,469
2,553
319,852
109,907
387,748
8,684,171
($37,108)
($52,155)
$8,773,434
99.42%
96.41%
Jun-2016
5,985,227
(465,914)
0
(53,961)
(158,533)
(253,420)
6,451,141
(3,217,631)
(233,524)
(244,224)
(64,168)
(724,984)
(301,591)
(1,517)
(781,016)
(587,907)
(278,700)
9,668,772
(225,451)
9,894,223
1,504
2,618
327,848
112,655
448,004
9,001,594
$0
($65,349)
$9,066,943
99.29%
96.79%
Jun-2017
3,570,884
(2,437,573)
0
(55,310)
(917,080)
(1,465,183)
6,008,457
(3,260,909)
(223,332)
(250,331)
(65,773)
(735,860)
(309,131)
(1,556)
(786,657)
(602,604)
(285,665)
9,269,366
(259,248)
9,528,614
1,541
2,681
336,040
115,471
444,820
8,628,061
$0
($540,038)
$9,168,099
94.31%
91.28%
Jun-2018
5,586,339
(690,545)
0
(56,694)
(253,352)
(380,499)
6,276,884
(3,350,340)
(232,070)
(256,589)
(67,416)
(746,898)
(316,858)
(1,596)
(818,437)
(617,668)
(292,808)
9,627,224
(224,710)
9,851,934
1,581
2,750
344,440
118,359
373,246
9,011,558
$0
($149,192)
$9,160,750
98.54%
95.92%
Jun-2019
6,535,355
(58,109)
0
(58,109)
0
0
6,593,464
(3,434,846)
(241,881)
(263,004)
(69,103)
(758,100)
(324,778)
(1,634)
(843,109)
(633,111)
(300,126)
10,028,310
(322,063)
10,350,373
1,621
2,818
353,052
121,318
453,136
9,418,428
$0
$0
$9,418,428
100.00%
96.58%
Jun-2020
6,311,418
(584,240)
0
(59,564)
(172,662)
(352,014)
6,895,658
(3,510,018)
(251,096)
(269,577)
(70,829)
(769,472)
(332,899)
(1,675)
(857,902)
(648,937)
(307,631)
10,405,676
(150,115)
10,555,791
1,659
2,889
361,876
124,349
498,369
9,566,649
$0
($185,254)
$9,751,903
97.89%
96.56%
Jun-2021
4,471,548
(2,617,143)
0
(61,050)
(1,020,766)
(1,535,327)
7,088,691
(3,581,944)
(257,492)
(276,318)
(72,601)
(781,014)
(341,222)
(1,718)
(871,097)
(665,160)
(315,322)
10,670,635
0
10,670,635
1,703
2,960
370,924
127,460
458,634
9,708,954
$0
($536,852)
$10,245,806
95.15%
94.76%
Jun-2022
6,679,021
(838,504)
0
(62,579)
(313,592)
(462,333)
7,517,525
(3,680,855)
(270,444)
(283,226)
(74,416)
(792,730)
(349,753)
(1,758)
(903,534)
(681,790)
(323,204)
11,198,380
(199,525)
11,397,905
1,744
3,034
380,596
130,646
445,324
10,436,561
$0
($162,808)
$10,599,369
98.57%
96.58%
Jun-2023
7,245,246
(533,486)
0
(64,143)
(185,640)
(283,703)
7,778,732
(3,767,907)
(278,904)
(290,306)
(76,275)
(804,621)
(358,494)
(1,805)
(927,380)
(698,836)
(331,286)
11,546,639
(256,944)
11,803,583
1,790
3,110
390,504
133,910
496,408
10,777,861
$0
($116,384)
$10,894,245
98.97%
96.57%
Jun-2024
Financial Analysis | 36
(638,284)
Utilities
The proforma expenses are based off the seller’s 2013 budget with estimated inflation.
Non-reimbursable/owner expenses were removed from the valuation. CBRE encourages investors to perform their own due diligence regarding owner specific expenses.
$4,393,443
[3]
$11.76
0 (2,882,594)
[2]
$3,878,958
0.00 (9.20)
(152,402)
(237,004)
(54,742)
(678,016)
(270,436)
274
(631,212)
(613,579)
(245,478)
7,276,037
0
7,276,037
329,763
0
282,000
532,149
6,132,125
($119,483)
$0
$6,251,608
CY 2012 Actual
FY 2014 is July 1, 2013 to June 30, 2014. Calendar year 2013 year-to-date statements are available upon request.
$14.91
$4,919,815
NET OPERATING INCOME
(3,035,276)
(0.47)
(0.71)
(0.15)
(2.10)
(0.84)
(0.57)
(1.90)
(1.70)
(0.76)
20.96
0.00
20.96
0.02
0.00
0.84
1.26
18.84
($0.86)
$0.00
$19.70
CY 2011 Actual (PSF)
[1]
(8.20)
0
($0.00)
(851)
(154,137)
(234,689)
(50,670)
(693,523)
(275,742)
(187,290)
(627,755)
(559,928)
(251,542)
($0.51)
(2,706,231)
Other
(169,531)
Management Fee
($0.74)
($0.17)
($1.60)
($0.81)
($0.00)
($1.93)
($1.64)
($0.79)
TOTAL OPERATING EXPENSES
(56,984)
(245,308)
Administrative
(526,799)
Real Estate Taxes
Insurance
(267,367)
Security
(1,068)
(539,606)
Repairs and Maintenance
Roads & Grounds
(260,433)
6,914,235
$23.11
7,626,047
Cleaning
OPERATING EXPENSES [2] [3]
EFFECTIVE GROSS REVENUE
6,914,235 0
$23.11
5,678
0
278,000
415,290
6,215,267
($283,494)
$0
$6,498,761
CY 2011 Actual
0
7,626,047
TOTAL GROSS REVENUE
General Vacancy Loss
$0.62
$0.00
204,434
0
$0.83
$0.98
$20.69
($0.23)
$0.00
$20.92
CY 2010 Actual (PSF)
Other Misc.
Tenant Work Orders
322,269
274,000
Parking Revenue
6,825,344
Total Scheduled Base Rent
Expense Reimbursement Revenue
($75,615)
$0
$6,900,959
Base Rent Abatements
Absorption & Turnover Vacancy
Base Rental Revenue
Scheduled Base Rent
REVENUES
CY 2010 Actual
Historical Income & Expense Detail
$13.32
(8.74)
0.00
(0.46)
(0.72)
(0.17)
(2.06)
(0.82)
0.00
(1.91)
(1.86)
(0.74)
22.05
0.00
22.05
1.00
0.00
0.85
1.61
18.59
($0.36)
$0.00
$18.95
CY 2012 Actual (PSF)
$3,088,648
(2,876,568)
0
(141,520)
(226,786)
(59,588)
(693,316)
(280,055)
(1,410)
(669,162)
(545,930)
(258,801)
5,965,216
0
5,965,216
1,398
2,430
304,436
331,574
5,325,378
(1,047,419)
(1,921,584)
8,294,381
FY 2014 Proforma [1]
$9.36
(8.72)
0.00
(0.43)
(0.69)
(0.18)
(2.10)
(0.85)
(0.00)
(2.03)
(1.65)
(0.78)
18.08
0.00
18.08
0.00
0.01
0.92
1.00
16.14
(3.17)
(5.82)
25.14
FY 2014 Proforma (PSF)
Existing Lease Expirations Fiscal Year
Number of Suites
Net Rentable Square Feet Expiring
Percentage Square Feet Expiring
Cumulative Square Feet Expiring
2014
5
41,733
12.65%
12.65%
2015
3
8,738
2.65%
15.30%
2016
6
24,376
7.39%
22.69%
2017
1
1,162
0.35%
23.04%
2018
9
112,695
34.16%
57.20%
2019
4
28,988
8.79%
65.98%
2020
0
0
0.00%
65.98%
2021
3
18,471
5.60%
71.58%
2022
0
0
0.00%
71.58%
2022+
1
1,800
0.55%
72.13%
Subtotal
32
237,963
72.13%
72.13%
Vacant
12
91,967
27.87%
100.00%
TOTAL
44
329,930
100.00%
100.00%
120,000
Rentable Square Feet
100,000
80,000
60,000
40,000
20,000
0 2014
37 | Financial Analysis
2015
2016
2017
2018
2019
2020
2021
2022
2022+
Financial Analysis | 38
Charlotte Economy
The Charlotte Economy Charlotte is the second leading financial center in the United
to the market, the most notable is TIAA-CREF’s construction of
States, following only New York City. Bank of America, the nation’s
their 930,000 square foot East Coast Operations Center in the
second largest bank with $2.2 trillion in assets is headquartered
University Research Park, which houses over 2,500 associates.
in Charlotte. Charlotte is also home to Wells Fargo’s Eastern
Other significant area employment events during this time frame
headquarters, formerly Wachovia Bank.
include, Lowe’s Home Improvement Warehouse relocating its corporate headquarters to Mooresville, 20 miles outside of
Further evidence of Charlotte’s appeal to the banking industry
Charlotte, Microsoft’s expansion of their East Coast Product Support
is that GMAC Financial Services, now branded as Ally Bank,
Center, Fortune 500 firm SPX, Inc. relocating to Charlotte, the
recently occupied 133,000 square feet in the recently renamed
Billy Graham Evangelistic Association moving from Minneapolis,
Ally Center in downtown Charlotte. In June of 2010, Fifth Third
and the culinary school, Johnson & Wales, consolidating their
Bank, the 23rd largest U.S. bank by assets, expanded and
Charleston, South Carolina and Norfolk, Virginia campuses in
relocated from the Charlotte suburbs into the renamed Fifth
Charlotte’s Gateway Village located downtown.
Third Center. US Bank, the 9th largest bank in the U.S. by assets also established a significant presence in Charlotte, relocating
The North Carolina Research Campus, located 28 miles northeast
two of US Bank’s major divisions to the city in July of 2010.
of Charlotte in Kannapolis, North Carolina, is a center for
Complementing these banks are large regional operations for
biotechnological, agricultural, food science, and nutritional
major financial services firms including Transamerica, AXA, The
research. The campus is a joint venture between the University of
Vanguard Group, Allstate, and TIAA-CREF.
North Carolina, NC State University, UNC Charlotte, NC Central University, UNC Greensboro, Appalachian State University, Duke
With 7.2 million people living in the Carolina’s “Urban Crescent”
University, Dole Foods, Castle & Cooke, LabCorp and the David H
region and over 6.4 million people in a one hundred mile radius,
Murdock Research Institute. Current research projects center around
Charlotte is the largest city within the nation’s fifth largest urban
the study of plant-based foods and how compounds produced in
region. Only New York City, Chicago, Los Angeles, and Miami
plants can protect against disease and support human health.
have larger urban regions. Charlotte is also the 5th ranked city in number of Fortune 500 headquarters with eight companies
Apple, Google, Facebook, AT&T, Disney, and American Express
located in the metropolitan area.
all operate data centers in the Charlotte region. The Charlotte region is home to approximately 2.5 million square feet of data
Since the early 2000’s, several additional employers representing
center space. With low operating costs and limited risk from
a wide variety of economic sectors have entered the Charlotte
natural disaster, the region is expected to witness additional data
business market. Of these recent major corporate relocations
center development in the future.
41 | Charlotte Economy
FORTUNE 500 FIRMS HEADQUARTERED IN CHARLOTTE
Company
Fortune Rank
2011 Revenue in Billions
9
$134.2
Lowe’s
50
$48.8
Nucor
157
$20.1
Duke Energy
173
$14.3
Family Dollar
302
$7.9
Goodrich Corp.
337
$7.0
Sonic Automotive
339
$6.9
Domtar
427
$5.9
SPX
460
$4.9
Ruddick
498
$4.4
Bank of America
Source: Fortune
Over the past three years, there have been numerous announcements of international companies opening or moving their U.S. headquarters operations to Charlotte – a testament of the area’s desirability to the business community. The most recent of the international firms to open U.S. headquarters operations include Biotage, DesignLine International, Electrolux (738 jobs), Husqvarna (160 jobs), SmoothWall Ltd, Teknek, and Teupen Maschinenbau GmbH. These firms, as well as Premier, Inc. a health insurance syndicate which plans to add 300 jobs by 2015, continue to prove that Charlotte has broad appeal as a headquarters location for large and small, foreign and domestic companies alike. Additional big wins for the Charlotte market include the 1,200 new jobs announced Connections, Inc. a healthcare exchange, technology, consulting and business. Diagnostic Devices, Inc., a Charlotte-based medical device company, will
add
100
jobs
by
2014
and
Zenta,
a
business
outsourcing
operation
has
expanded
and
is
increasing
its
operation by 500 jobs by 2013. Similarly, IBM’s new loan processing center will add a total of 600 jobs by 2013. Other large Charlotte employers in various industries include US Airways, Carolinas Healthcare System, IBM, and Harris Teeter, Inc. A list of many of the city’s largest employers is shown below.
Major Charlotte Employers 20,000 – 29,000 EMPLOYEES
3,000 – 4,999 EMPLOYEES
Carolinas Healthcare System*
AT&T
Wells Fargo & Company
Compass Group* Diamler Trucks North America
10,000 – 15,999 EMPLOYEES
Harris Teeter*
Bank of America & Merrill Lynch*
Mecklenburg County*
Charlotte-Mecklenburg Schools*
University of North Carolina Charlotte
Wal-Mart & Sam’s Club
U.S. Government
5,000 – 9,999 EMPLOYEES
1,500 – 2,999 EMPLOYEES
Adecco Staffing
BB&T
City of Charlotte*
Belk*
Duke Energy Corporation*
Family Dollar Stores*
Food Lion
Commscope
Lowe’s Home Improvement*
IBM
NC State Government Presbyterian Hospital* U.S. Airways
*Corporate Headquarters/U.S. Headquarters in Charlotte Source: Charlotte Chamber of Commerce 4Q 2010
U.S. Postal Service
Charlotte Economy | 42
Charlotte also is home to several businesses that have been
Along with Duke Energy and Piedmont Natural Gas, industry
recognized as some of the fastest-growing private companies in the
leading firms such as The Shaw Group, AREVA NP, Toshiba,
U.S. including Hospital Partners of America Inc, Red Ventures, Reed F,
Westinghouse, Fluor, Siemens and URS have helped Charlotte
Holland Transportation Management Services, and TeleSource Inc.
to become a center for engineering and design in the energy industry. In addition to engineering and design Charlotte boasts a number of manufacturing operations including CoaLogix, SPX
Accolades
(Headquartered in Charlotte), Siemens, Strategic Power Systems, Inc. (SPS), and VA Tech Hydro USA Corporation. These engineering
#1 Largest Population Increase (%) 2000-2010 – (of 42 urbanized areas of 1M+) U.S. Census, March 2012
and manufacturers continue to attract additional energy related companies who either supply or service them.
#1 Happiest Young Professionals – (of 20 cities) Forbes, September 2011
Although Charlotte has a history of attracting companies in the energy sector, only with the recent shift into alternative or “green
#1 Major Market of the Year – Southern Business & Development, September 2011
energy” has the City jumped to the top of the national scene. Recent operations for Sencera International Corporation (solar), Saertex
#1 Lowest Violent Crime Rate – (of 50 Largest Metros) Forbes.com, October 2011
USA (composite materials used in blades for the wind turbine industry) and Celgard LLC (rechargeable lithium-ion batteries)
#1 Least Expensive City for Business Travel - Concur Technologies, August 2011
are some of the more high profile Charlotte “green energy” firms. The “green energy” companies and the energy sector as a whole
#2 Best Airport – Travel + Leisure, April 2012
have benefited from the growth in the educational opportunities available within the region. Educational opportunities within
#2 Best Value City - Kiplinger.com, July 2011
Charlotte include: University of North Carolina Charlotte’s Energy Production and Infrastructure Center, The Electric Power Research
#2 Top State for Business - ChiefExecutive.net, May 2011
Institute (EPRI), and Central Piedmont Community College’s deep
#2 Lowest Manufacturing Costs - American Institute for Economic Research, Jun 2011
catalog of technical course work, from welding to electrical engineering technology to industrial maintenance and even
#3 City of The Future - fDi Magazine, April 2011
environmental technology.
#3 Potential to Attract Foreign Investments - fDi Magazine, April 2011 #4 Best for Small Business - American City Business Journals, Apr 2011 #5 Most Desirable Place to do Business - Area Development Special Magazine
CHARLOTTE’S EMERGING ENERGY SECTOR
Serving
more
than
4
million
customers
Duke
Energy,
headquartered in Charlotte, is the cornerstone of the City’s energy sector. Furthermore, Duke Energy recently merged with Raleigh, NC based Progress Energy. The combined entity is the nation’s largest utility company with 7 million customers and a production capacity exceeding 57 gigawats. In addition to over 100 firms with highly focused energy industry services, more than 550 firms in the Charlotte area provide energy and technical expertise. For instance, Piedmont Natural Gas Company, a leader in the natural gas industry is also headquartered in Charlotte. Piedmont serves over one million customers in North Carolina, South Carolina and Tennessee. Together these two headquarters operations have been attracting additional energy related companies for decades; however, recently the City has moved to further increase its reputation as an energy hub.
43 | Charlotte Economy
WORKFORCE
The Charlotte-Gastonia-Rock Hill MSA labor force totals 860,558
ANNUAL UNEMPLOYMENT RATE
and had an unemployment rate of approximately 9.4% at of the
MSA
State
US
2000
3.4%
4.3%
4.0%
2001
5.0%
6.8%
5.7%
of 7.8% and marginally higher than the state rate of 9.2%. Since
2002
6.1%
6.5%
6.0%
the late 1980’s, Charlotte’s Mecklenburg County has generally
2003
6.3%
6.0%
5.7%
Charlotte workforce has grown considerably. In absolute and
2004
5.7%
5.4%
5.4%
relative terms, the Charlotte economy is emerging from the
2005
5.3%
4.9%
4.9%
2006
4.8%
4.7%
4.4%
2007
4.7%
8.5%
5.0%
2008
6.3%
9.2%
7.3%
2009
11.7%
10.9%
9.9%
2010
10.7%
9.8%
9.4%
differently, had the Charlotte region not experienced substantial
2011
10.3%
10.4%
8.5%
in-migration over the past two years, the unemployment rate would
December-2012
9.4%
9.2%
7.8%
end of December 2012, reflecting the recent recession’s impact on financial services firms and the in migration of recent college graduates choosing Charlotte as the place to launch their careers. The present unemployment rate is higher than the national rate
outpaced the national rate of employment while the size of the
recession earlier than the national average and has attracted people looking for skilled talent in the banking, transportation and energy sectors. According to the U.S. Census Bureau, from mid2010 to mid-2011, the latest data available, Charlotte’s population increased by more than 19,600, ranking it ninth in gains in raw numbers among all cities nationwide. The report also mentioned that the Charlotte market is “attractive, particularly for young people who are out of college and looking for new jobs.” Said
be lower than its current rate. However this pool of talent has served to attract employers. Since 2000 Charlotte employment
Source: Bureau of Labor Statistics
has grown by 19.5%, widely exceeding the national increase of 0.4% and the state wide gain of 10.7% for the same period.
Charlotte Economy | 44
Douglas International Airport boasts 5 concourses with 97 airline gates, and plans are in place to add 12 more gates to Terminal E as passenger volume increases in the future. The first phase of the Terminal E expansion, totaling 12 gates, began operation in June 2012. The airport is US Airways’ largest hub. Charlotte’s immediate access to several major U.S. interstates further enhances the city’s accessibility and transportation qualities. I-85 and I-77 run north-south through Charlotte and I-40 runs east-west forty miles north of the city. These major interstates connect Charlotte to the Southeast and the entire country. Presently, the final segment of Charlotte’s beltway (I-485), on the north side of town, is under construction with completion planned for 2016. In May of 2012, Norfolk Southern Corporation broke ground on EXCELLENT LOCATION
Centered in the middle of the United States’ eastern seaboard, approximately 56% of the entire U.S. population lives within a 650-mile radius of the city. Within this radius, Charlotte is easily accessible by 24-hour truck delivery or a two-hour flight. As the nation’s 17th largest city, Charlotte is situated 143 miles from Raleigh, 210 miles from Charleston, and 241 miles from Atlanta. Charlotte is a two-hour drive to the Appalachian or Smoky mountains and a three-hour drive to the Carolina coast. EXTENSIVE TRANSPORTATION NETWORK
One of the more influential drivers of Charlotte’s tremendous growth over the past several years has been the city’s excellent transportation system. Charlotte’s international airport ranks as the 8th most active in the country, with over 640 scheduled flights leaving Charlotte each day. There are non-stop flights to 179 international cities including London, Frankfurt, Munich, Paris, Rome, Toronto, Rio de Janeiro, the Caribbean and several cities in Latin America offered by seven major airlines. In 2008, the Charlotte Douglas International Airport was recognized as the fastest growing airport in the country. Each year over 34 million passengers travel through Charlotte’s airport with over 17 million enplanements. The Charlotte
45 | Charlotte Economy
the Charlotte Regional Intermodal Facility located at Charlotte Douglas International Airport. The facility, which will transfer trailers and containers between trucks and trains, will be capable of 200,000 lifts per year and will replace Norfolk Southern’s existing intermodal facility in downtown Charlotte. The 200-acre facility will allow for future expansion to handle the anticipated growth of intermodal traffic. The facility will cost $92 million to construct and is scheduled to be complete in late 2013. Currently, Norfolk Southern Railway and CSX Transportation Systems, which bring more than 300 trains through Charlotte weekly, provide freight transportation to and from Charlotte. The first line of Charlotte’s multi-billion dollar light rail system began operation in November 2007. When complete the light rail and commuter rail system are expected to transport residents throughout the city, originating in Pineville to the south of Charlotte and concluding in Mooresville 20 miles north of the city. Additional lines are planned to run to University City in the northeast and along Highway 74 to the eastern expanses of the city. Amtrak provides passenger rail service and Greyhound provides over 250 arrivals and departures weekly.
EXCELLENT QUALITY OF LIFE AND EDUCATION
Perhaps Charlotte’s most compelling selling point is simply its
and 2010. Breaking down this growth, Charlotte grew by 25.5%
remarkable quality of life. Though a leading national business
in the 1980’s only to exceed this growth in the 1990’s by growing
center, Charlotte has been able to maintain a low cost of living,
at 26.3%. Presently, Charlotte is the nation’s 17th largest city with
high quality of life, and the charm and hospitality for which the
an estimated 756,912 people living within the city limits and 1.8
Carolinas and the Southeast have come to be known. In fact, in
million living in the metropolitan area. This incredible population
recent years the U.S. Conference of Mayors acclaimed Charlotte
growth has been matched with steady job growth over the past
as being the “Nation’s Most Livable City.” The mild winters and
two decades as well. Since 2000, Charlotte has added an annual
falls coupled with the favorable springs and summers create a
average of over 6,540 jobs each year, including more than 18,850
comfortable climate proven to be attractive to Charlotte’s numerous
new jobs in 2010, more than 18,900 in 2011 and more than
new residents. Charlotte residents benefit from being south of the
14,300 through the first half of 2012. These jobs are supported by
Frost Belt and inland from the path of hurricanes.
Charlotte’s extensive draw of over 137,000 commuters who travel in from the surrounding counties each business day.
The Charlotte community offers a diverse menu of entertainment opportunities ranging from professional sporting events to the arts
Despite its recent growth surge, Charlotte and Mecklenburg
and outdoor recreational activities. Charlotte is home to the NFL’s
County have maintained low living costs for their residents. The
Carolina Panthers and the NBA’s Bobcats while hosting the 3rd largest
per capita state and local taxes for Charlotte are the 16th lowest
attended sporting event in the country each year, NASCAR’s Coca-
in the United States. Of 26 American Cities with populations
Cola 600. Charlotte also plays host to the Wells Fargo Championship,
between 300,000 and 800,000 residents, Charlotte boasts the
which is played at the prestigious Quail Hollow Country Club. Quail
10th lowest cost of living index; including Atlanta, Minneapolis,
Hollow will also play host to the 2017 PGA Championship.
Denver, Miami, and Washington, D.C. and well below the national average. Among the same 26 cities, Charlotte has
In addition to Charlotte’s attractive entertainment options, the city is
the 7th lowest health care cost rating. In a similar study of U.S.
within a three hour drive of several nationally acclaimed universities.
cities with greater than $20 billion in wholesale sales each year,
Within North Carolina alone, Duke University, the University of North
Charlotte ranks as the 4th most affordable housing market.
Carolina, and Wake Forest University continually rank academically within the top 30 national universities and Davidson College is
HOUSEHOLD & POPULATION COMPOSITION
ranked as the #11 liberal arts college in the nation. The University
CHARLOTTE MSA
UNITED STATES
of North Carolina at Charlotte, a sister school to UNC Chapel Hill,
Population
boasts a 100 acre campus and an enrollment of more than 25,000.
Population Growth 2000 - 2012
While maintaining a remarkable quality of life, Charlotte has
Average Household Size
2.58
2.57
grown significantly over the past two decades. According to the
Median Age (years)
35.05
36.76
2010 U.S. Census Charlotte is the 9th fastest growing city in the
Average Household Income (2012)
$69,275
$67,303
9.4%
7.8%
nation. The Census reports that Charlotte witnessed an annual increase of over 19,000 new residents to the city between 2000
Percentage Unemployed (December 2012)
1,826,146
312,941,961
37.27%
11.26%
Source: Claritas & US BLS
Charlotte Economy | 46
DOWNTOWN AREA OVERVIEW
Downtown Charlotte is the central nerve center for all business activity in the region and comprises the core of the largest city in both North and South Carolina combined. This vibrant area has been in a remarkable growth phase as considerable new construction has occurred over the past two decades. Twelve new office buildings, multiple hotels, restaurants, residential areas, and new NFL and NBA venues have emerged downtown in the past fifteen years. The success of downtown is due in large part to the success of Charlotte’s diverse economy. DOWNTOWN DEMOGRAPHIC DATA CHARLOTTE
121 WEST TRADE (1 MILE RADIUS)
756,912
15,960
Average Household Size
2.43
1.55
Median Age (Years)
33.56
36.65
$70,425
$69,958
17.9%
20.8%
20.61%
141.69%
47.9% Married 52.1% Unmarried
25.2% Married 74.8% Unmarried
17.3% Professional 14.4% Service 13.2% Office Support
23.4% Professional 15.6% Sales 14.2% Management
$225,659
$306,707
Population
Average Household Income (2012) Household Income Above $100,000 by Percentage Population Growth (2000 – 2012) 2011 Marital Status Top 3 Employment Designations Average Owner-Occupied Property Values
Source: Claritas & US BLS (December 2012) CURRENT DOWNTOWN DEVELOPMENT TRENDS
In addition to the previously discussed office developments, Charlotte has experienced substantial growth in many different facets in the past four years. The 1.35 million square foot, 97% pre-leased Duke Energy Center is a part of a greater mixed use project that includes the Levine Center for the Performing Arts, a cultural destination featuring the 1,200 seat North Carolina Dance Theatre, the Mint Museum of Art, the Gantt Cultural Center, and the Bechtler Museum of Modern Art. NASCAR Plaza was completed in the second quarter of 2009, which included the NASCAR Hall of Fame starting operations in May of 2010. The 390,000 square foot building delivered at the height of an unstable economy initially faced difficulties gaining leasing momentum. However, Fortune 1000 firm Chiquita Brands International recently relocated its headquarters from Cincinnati, Ohio to NASCAR Plaza, leasing a majority of the remaining vacancy. Charlotte is home to more than 80% of NASCAR teams and is an ideal location for the organization’s namesake tower and Hall of Fame. The $160 million Hall of Fame features state-ofthe-art exhibits and meeting center and is expected to boost tourism for the Charlotte region. The 95% pre-leased, 1 Bank of America Center was the final of the four downtown towers to be delivered during 2009 and 2010, and will likely be the last office tower to be developed for many years due to the lack of buildable parcels, uneconomical development costs for new construction in downtown Charlotte, and tighter limits on financing for new construction.
47 | Charlotte Economy
In response to the wave of residential development and a decade-long resurgence in downtown Charlotte’s nightlife, EpiCentre, a mixed use development was constructed to fill a much needed entertainment niche. The development features an Aloft hotel, 60,000 square feet of office space, and a 260,000 square foot entertainment/retail complex complete with bowling alley and a movie theater. Another significant development was the completion of the Carolinas’ first Ritz Carlton in 2009. In the summer of 2006, residents moved into Courtside, downtown’s Charlotte’s first high-rise condominium tower. Two additional projects delivered soon thereafter, TradeMark and Avenue. The Vue, a 51-story condominium building was delivered in 2010. Currently plans are in various stages of planning for up to $3.4 billion of residential development for downtown Charlotte. Many of the announced residential projects have been placed on hold pending financing, however, it is evident that several of these developments will be constructed in future years. Downtown Charlotte boasts the deepest amenity base in the region with a large concentration of restaurants, hotels, banks, churches, parks, civic and cultural centers. A list of the amenities is shown below: Downtown Charlotte Amenities The Ritz-Carlton Hotel
Blumenthal Performing Arts Center
12+ Places of Worship
The Westin Hotel
The Levine Museum of the New South
Johnson & Wales University
The Omni Hotel
Mint Museum Craft & Design
The Childress Klein YMCA
The Marriott Center City
The Charlotte Symphony
Marshall Park
aLoft Hotel
The Booth Playhouse
Overstreet Mall
Hilton Charlotte Towers
The Belk Theater
Numerous Retail Establishments
Hyatt House
Opera Carolina
125+ Food and Dining Establishments
The Blake Hotel
Discovery Place
City Transit System
Courtyard by Marriott
Spirit Square
EpiCenter
The Charlotte City Club
Bechtler Museum of Modern Art
Central Library
Bank of America Stadium
NASCAR Hall of Fame
Harvey B. Gantt Center
Time Warner Arena
Trinity Episcopal School
Romare Bearden Park
McColl for Visual Art
Knight Theatre
The Green
Charlotte Economy | 48
Charlotte Office Market Overview
Charlotte Office Market Overview The Charlotte office market totals 38.4 million square feet of multi-tenant space and reported a 15.2% vacancy rate as of year-end 2012. Including single tenant buildings, the Charlotte market is over 55 million square feet in eleven submarkets. The largest submarket is Downtown with 15.6 million square feet of space followed by the I-77 Corridor, the 51 Perimeter, and SouthPark with 6.6, 4.5, and 3.9 million square feet, respectively. Since 1995 the office market has grown by approximately 92%. Throughout this period of incredible growth, office rents grew steadily as Charlotte recorded a 36% growth in average office rents from the first quarter of 1996 through year-end 2009. Average asking rents climbed $5.99 per square foot from $16.45 to $22.44. CHARLOTTE OFFICE LEASE RATES VS. VACANCY $23.00
20.0% 18.0%
$22.00
16.0% 14.0%
$21.00
12.0% 10.0%
$22.44
8.0% $19.40
$19.41
$19.76
$21.09
$20.57
$19.82
$19.97
$20.32
$18.00
$20.68
$19.00
$21.91
$20.00
$17.00
6.0% 4.0% 2.0% 0.0%
2002 2003 2004 2005 2006 2007 2008 2009 *2010 *2011 *2012 Lease Rates
Vacancy Rate
* In 2010 CBRE Research changed the criteria for calculating average rents to only include asking prices, not existing leased properties.
Starting in the first quarter of 2010, CBRE changed its methodology for calculating average asking direct lease rates nationally. Using the new method we are presenting a number that is thought to more accurately reflect the market. Therefore the first quarter of 2010 is the new benchmark for increases or declines in asking rates. Based on the new methodology, the average weighted lease rate for the Charlotte market is $19.40 for the fourth quarter of 2012.
51 | Charlotte Office Market Overview
4Q/2012 MARKET STATISTICS – OVERALL MARKET Submarket
Existing Space (SF)
Vacancy Rate
Overall Availability
2012 Absorption
2011 Absorption
Under Construction
Average Rental Rate
Downtown
15,642,121
9.4%
9.8%
194,840
-154,432
0
$23.78
I-77 Corridor
6,580,620
25.7%
25.8%
285,671
-196,243
0
$16.44
51 Perimeter
4,542,425
15.8%
16.6%
244,974
259,539
275,000
$21.81
SouthPark
3,970,672
11.8%
12.8%
116,855
-40,615
0
$21.44
Northeast
2,216,596
21.4%
21.4%
130,817
-11,355
0
$16.92
Midtown
1,797,929
7.8%
8.5%
25,879
129,509
0
$22.17
North
1,217,559
21.4%
21.4%
42,475
41,138
0
$18.36
East
1,044,400
21.4%
21.4%
19,770
-4,388
0
$14.11
Park Road Area
624,707
32.1%
32.5%
-9,554
728
0
$16.44
Crownpoint
508,896
31.3%
31.3%
-9,505
-4,280
0
$12.77
Cotswold
224,389
14.1%
22.0%
47,972
15,595
0
$14.36
38,370,314
15.2%
15.7%
1,090,149
35,196
275,000
$19.40
Overall Charlotte
Job growth fueled office space absorption throughout the 2000’s as the overall office market absorbed a total of 6.6 million square feet between 2000 and year-end 2012. Averaging 507,000 square feet per year of annual net absorption since 2000, the Charlotte office market has demonstrated its ability to recover quickly from downturns in the economy. In 2011, Charlotte absorbed 35,196 square feet, however, 2012 was a much stronger year as the market witnessed 1,090,149 square feet of absorption, a clear sign of recovery for the overall Charlotte office market.
CHARLOTTE ANNUAL ABSORPTION 1,500,000
1,000,000
500,000
SF
(500,000)
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
(1,000,000)
In the development market, 275,000 square feet are presently under construction for the entire city of Charlotte. The building is located at Ballantyne Corporate Park in the 51 Perimeter submarket and will have no effect on 121 West Trade. Construction is expected to remain limited for the near term as developers are reluctant to build additional multi-tenant office buildings due to the national economy.
Charlotte Office Market Overview | 52
OFFICE MARKET OUTLOOK
MAJOR EMPLOYERS LOCATED DOWNTOWN
Currently 0.5% of the office market is available for sublease,
Bank of America
representing a negligible impact on the leasing market. With job
Wells Fargo Bank
growth projected to increase throughout 2013 and into 2014, the vacancy rate for the broader Charlotte office market is expected to improve to 14% and achieve a 13% vacancy rate in 2014. As construction costs stay high and demand intensifies, the vacancy rate
Duke Energy Charlotte Mecklenburg Schools ADECCO
will drop to 12% by late 2015. As the overall market vacancy rate
AT&T
falls during this time period, renewed upward pressure on rents will
City of Charlotte
take hold, accelerating rent growth between late 2014 and 2015
Alston & Bird, LLP
DOWNTOWN CHARLOTTE HISTORICAL PERSPECTIVE
The Downtown Charlotte skyline has exploded over the past sixteen years with seven new office towers and several mid-rise buildings emerging as the city developed into a major business hub in the Southeast.
Robert Half International Ally Bank BB&T Charlotte Observer Grant Thornton Kennedy Covington Lobdell Hickman LLP
The office market has benefited greatly from this growth as it has
Hearst Corporation
expanded by 27% in size from the first quarter of 2000 alone.
PricewaterhouseCoopers LLP
This new development and demand pushed area rental rates
Mecklenburg County
upward as the class “A” market remained at low vacancy rates for the majority of the 2000’s. The growth trends in Downtown Charlotte over the past two decades forced the submarket’s vacancy rate to an extremely low level of 2.2% in early 2000 and a record setting 1.1% in the first quarter of 2008. As the
Kilpatrick Stockton LLP Womble Carlyle The C.I.T. Group McGuire Woods LLP
economy cooled during the credit crisis and ensuing recession,
Parker Poe
vacancies increased due to a lack of demand, tenant downsizing,
Source: CoStar - 2012
and new deliveries in the Downtown submarket.
SUPPLY AND DEMAND
Downtown Charlotte has a total supply of 15.6 million square feet of space and had 1.47 million square feet or 9.4% of the submarket vacant at the end of the fourth quarter 2012. Demand in the Downtown submarket had declined due to the recent recession, however, all indications point toward sustained improving conditions within the submarket. While Bank of America and Wells Fargo have reduced their Downtown footprint, the reduction in leased space is not nearly as great as expected. In fact, had the market not witnessed the delivery of four new office towers totaling over 2.8 million square feet since 2009, the vacancy rate would likely be around 5%.
53 | Charlotte Office Market Overview
DOWNTOWN SUBMARKET LEASE RATES VS. VACANCY 12.0%
$28.00 $27.00
10.0%
$26.00 8.0%
$25.00
$23.78
$23.71
$23.72
$25.46
$23.15
$22.51
$22.78
$23.10
$21.00
$23.27
$22.00
$24.27
$23.00
6.0%
$27.14
$24.00
$20.00
4.0% 2.0% 0.0%
2002 2003 2004 2005 2006 2007 2008 2009 *2010 *2011 *2012 Downtown Lease Rates
Downtown Vacancy Rate
* In 2010 CBRE Research changed the criteria for calculating average rents to only include asking prices, not existing leased properties.
RENTAL RATES
DOWNTOWN MARKET OUTLOOK
Based on the new CBRE methodology, the average Downtown
Over the next decade, Downtown Charlotte will continue to
Charlotte market rental rate was $23.78 per square foot at the
emerge as a leading city on the East Coast. The office market will
end of 2012. Average class “A” downtown Charlotte asking rental
continue to expand as the city’s diversified economy continues to
rates were $24.69 per square foot while class “B” rates achieved
grow and bring more jobs to the area. Vacancy rates will continue
a mark of $19.77 per square foot. Rents for the class “A” space
to fall over the next two years as demand intensifies with an
in the new office towers range between $27.00 and $30.00 per
improving economy. Downtown rents will inevitably experience an
square foot and are projected to escalate quickly once demand
increase over the next several years given the significant existing
intensifies. 121 West Trade will capitalize on the higher rental
gap between current average market rents of $23.78 per square
rates achieved at these downtown properties and will be able to
foot and replacement rents in the mid $40’s per square foot.
increase rents in the wake of these buildings stabilizing.
Charlotte Office Market Overview | 54
121 West Trade Competing Properties Building
Size
Rental Rate
Occupancy
Year Built
Bank of America Corporate Center
1,212,176 SF
$30.00
92.9%
built in 1992, renovated in 2010
Bank of America Plaza
866,810 SF
$27.00 - $28.00
93.6%
built in 1974, renovated in 1992
101 Independence Center
529,817 SF
$24.00 - $25.00
80.2%
built in 1983, renovated in 2001
One Wells Fargo Center
985,315 SF
$30.00
95.5%
1988
1,300,000 SF
$30.00
98.7%
2010
Three Wells Fargo Center
930,733 SF
$30.00
100%
1999
Fifth Third Center
682,836 SF
$29.50
100%
1997
Hearst Tower
970,002 SF
$31.00
95.9%
2002
1
2
3
4
5 Duke Energy Center
6
7
8
55 | Charlotte Office Market Overview
Building
Size
Rental Rate
Occupancy
Year Built
1 Bank of America Center
750,000 SF
$30.00
99.7%
2010
Ally Center
368,000 SF
$25.00
82.9%
2009
NASCAR Plaza
390,000 SF
$24.50 - $26.50
86.4%
2009
Carillon
488,910 SF
$26.50
75.9%
1991
First Citizens
490,100 SF
$22.00
92.6%
built in 1985, renovated in 1992
625,026 SF
$24.50 - $ 26.50
99.1%
built in1981, renovated in 1994
553,056 SF
$22.00 - $24.00
94.4%
built in 1977, renovated in 1997
9
10
11
12
13
14 Charlotte Plaza
15 BB&T Center
Charlotte Office Market Overview | 56
Imagination
Trademark Condos
3 12
Wake Forest University
8
7
Ritz
EpiCentre
2
BofA Plaza
13
aLoft
15
14
Two Wells Fargo Wells Fargo Plaza
6
Catalyst
10 5
Time Warner Cable Arena
9
1
Courtside
Charlotte Hilton Center City
4 11
Disclaimer CBRE, Inc. operates within a global family of companies with many subsidiaries and/ or related entities (each an “Affiliate”) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates may represent various clients with competing interests in the same transaction. For example, this Memorandum may be received by our Affiliates, including CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the “Property”) may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property. In all instances, however, CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum and will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum. This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the Property or the owner of the Property (the “Owner”), to be all-inclusive or to contain all or part of the information which prospective investors may require to evaluate a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other information provided and made herein are subject to material variation. All references to acreages, square footages, and other measurements are approximations. Additional information and an opportunity to inspect the Property will be made
available to interested and qualified prospective purchasers. In this Memorandum, certain documents, including leases and other materials, are described in summary form. These summaries do not purport to be complete nor necessarily accurate descriptions of the full agreements referenced. Interested parties are expected to review all such summaries and other documents of whatever nature independently and not rely on the contents of this Memorandum in any manner. Neither the Owner or CBRE, Inc, nor any of their respective directors, officers, Affiliates or representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of this Memorandum or any of its contents, and no legal commitment or obligation shall arise by reason of your receipt of this Memorandum or use of its contents; and you are to rely solely on your investigations and inspections of the Property in evaluating a possible purchase of the real property. The Owner expressly reserved the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions with any entity at any time with or without notice which may arise as a result of review of this Memorandum. The Owner shall have no legal commitment or obligation to any entity reviewing this Memorandum or making an offer to purchase the Property unless and until written agreement(s) for the purchase of the Property have been fully executed, delivered and approved by the Owner and any conditions to the Owner’s obligations therein have been satisfied or waived. By receipt of this Memorandum, you agree that this Memorandum and its contents are of a confident nature, that you will hold and treat it in the strictest confidence and that you will not disclose this Memorandum or any of its contents to any other entity without the prior written authorization of the Owner or CBRE, Inc. You also agree that you will not use this Memorandum or any of its contents in any manner detrimental to the interest of the Owner or CBRE, Inc. If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc.
Investment Summary | 58
Exclusive Marketing Agents RYAN CLUTTER Executive Vice President CBRE | Capital Markets 750 9th Street, NW Suite 900 Washington DC 20001 T (202) 585.5643 F (202) 783.1723 ryan.clutter@cbre.com
59 | Investment Summary
Financing Contacts PATRICK GILDEA Senior Associate CBRE | Capital Markets 201 South College Street Suite 1700 Charlotte, NC 28244 T (704) 331.1217 F (704) 331.1259 patrick.gildea@cbre.com
COMPIE NEWMAN Senior Vice President CBRE | Capital Markets 201 South College Street Suite 1700 Charlotte, NC 28244 T (704) 927.1454 F (704) 334.0939 compie.newman@cbre.com
HAL KEMPSON First Vice President CBRE | Capital Markets 201 South College St Suite 1700 Charlotte, NC 28244 T (704) 927.1453 F (704) 334.0939 hal.kempson@cbre.com