Commercial Confidential: Ally Center

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When Leah Bailey looks back at 2009, the year Ally Center was built, two words come to mind: ghost town.

Bailey, who handles leasing for the 15-story office building on South Church Street, said an Ally Center tenant would have been hard-pressed to find places to eat in the area around the high-rise.

The lack of restaurants, coupled with other offer towers being built around the same time, made it tough for Ally, a Class A, “boutique-y” building, to compete, she said.

“That whole area when we were coming out of the ground was, like, dead,” Bailey said. “There was nothing. When we moved in in ’09, there was no retail, meaning there were no restaurants, no coffee shops. Everybody had to walk into town … somewhere closer to Tryon Street,” if they needed a place to eat.

Since 2009, restaurants have popped up in the neighborhood, she said, pointing to Halycon and celebrity chef Emeril Lagasse’s E2, among other new eateries.

“You just started to see that part of town come alive,” she said.

Still, Ally Center has a vacancy rate that is higher than the average that Karnes Research reported in the third quarter for Class A office space in Mecklenburg County. According to Bailey, the building is 31 percent vacant. For all of the county’s Class A office space, the vacancy rate was 15.8 percent in the third quarter, Karnes said.

Now that it’s easier to find a place to eat in the area, Ally Center has another challenge, Bailey said: finding takers for its lower floors. The problem is that many tenants want to be in the upper part of office buildings, she said, because of the views of the city those higher floors provide.

“The lower floors have held us back,” she said.

So, in March of 2010, Trinity Capital Advisers and Principal Financial Group, owners of Ally Center, began converting portions of the building into “quick and ready-to-go space” with “above-standard” finishes, she said.

That decision was made, Bailey said, after Ally Center was passed over for some multitenant deals in which companies needed about 3,500 square feet or more of space. The spec-space strategy allows Ally Center to provide offices for a tenant within 60 days or less, she said.

The idea, she said, came from studying other markets, like New York, where buildings have offered similar “prebuilt” office spaces.

Trinity and Principal transformed roughly 35,000 square feet on various floors of Ally Center into spec space as part of Phase 1, Bailey said. Of that, all but 6,100 square feet on the third floor has been leased.

In Phase 2 of the project, a total of 13,000 square feet has been converted into prebuilt space on the fourth floor, she said. So far, 3,500 square feet of that has been leased.

Charlotte-based Redline Design handled the design for the spec spaces at Ally Center, Bailey said.

Thanks to the new restaurants and other development in the area — Romare Bearden Park and a ballpark for the Charlotte Knights Triple-A baseball team are under construction nearby — Bailey has a rosy outlook for Ally Center and the neighborhood, home to the Bechtler Museum of Modern Art, the Harvey B. Gantt Center for African-American Arts and Culture, the John S. and James L. Knight Theater and the Mint Museum Uptown.

With all of that development, Bailey said she sees a shift occurring in the South Church Street area.

While the intersection of Trade and Tryon streets will always be the “center of town,” she said, “a part of that energy has moved south,” toward Ally Center, she said.

“I think people are starting to see that South Church has come alive.”

Address: 440 S. Church St.

Square feet: 368,092

Year built: 2009

Developer: Trinity Capital Advisors

Owners: Trinity and Principal Financial Group

Leasing company: Trinity Partners

Lease rates: $24.50 to $25 per square foot

Vacancy rate: 31 percent

Major tenants: Midvale, Utah-based Ally; Omaha, Neb.-based HDR. (Trinity wouldn’t disclose how much square footage those tenants lease.)

Editor Deon Roberts contributed.