15 Feb, 2019
The developers behind a new, fully leased office building at Raleigh’s Brier Creek community struck a $34.1 million deal for the property, shortly after celebrating the project’s first birthday, according to those who worked on the sale.
Developer Heritage Properties Inc. and joint venture partner Alex. Brown Realty, Inc. completed the sale of the Legacy at Brier Creek building to a company owned by insurer Zurich North America. The building opened in December of 2017 and is fully leased.
Ryan Blair, Vice President of Development and Acquisitions at Heritage Properties, says the deal is further evidence of the growing interest from institutional investors and foreign capital in Raleigh.
“It’s a testament to the strength of the Raleigh market,” Blair says. “There’s been a lack of new product trading over the past six years and you’re finally starting to see some new product trade that is in line with other markets.”
As evidence of interest from outside investors, Blair points to deals such as the $314 million sale in September of a five-building office portfolio at Perimeter Park to Singapore-based investor Ascendas Land International. That sale equated to $285 per square foot. The Legacy at Brier Creek sale, while smaller, registered at $291 per square foot.
The building was Heritage Properties’ first project in the Triangle, funded in part by an $18.5 million construction loan from BB&T in 2016. Since then, the Maryland-based developer has been looking to expand its reach in Raleigh.
Blair has been the driving force behind the firm’s One Glenwood project downtown, slated to begin welcoming tenants in the spring. The company also is on track to begin construction on a neighboring sister tower early this summer.
And the company doesn’t plan to slow down in the Triangle. Blair says the proceeds from the Legacy at Brier Creek sale will be put toward new real estate investments in the region. “We’re trying to grow our presence here and continually see opportunities,” Blair says.
Legacy at Brier Creek is among the priciest in the US-70/Glenwood Avenue office market, with an office lease rate of $28.25 per square foot.
Infosys, a technology services and consulting company, occupies a majority of the building. Other tenants include the IRS and Sage Therapeutics.
The underlying property associated with the building totals more than 9 acres, with room for an additional building, Blair says.
The office market remains tight in the area. Class A office vacancy ticked up in the US-70/Glenwood Avenue submarket to 6.6 percent in the fourth quarter, up from 4.9 percent in the quarter prior, but vacancy remains low across the region. The overall office vacancy rate in the submarket is less than 8 percent, well below the Triangle average of 12.4 percent.
Cushman & Wakefield’s David Finger, Sara Owen, David Meline and Samir Idris represented the sellers, according to a news release.
Zurich Alternative Asset Management advised the buyer on the deal, with a team led by Roy Rosenbaum and Sean Bannon.