Proposed SouthPark office buildings would create much-needed contiguous space

CHARLOTTE – Lincoln Harris, the longtime Charlotte-based developer, last month announced plans to bring two large office buildings to the SouthPark office submarket.

This rendering, courtesy of Lincoln Harris, shows the design of the two Capitol Towers buildings.

The two buildings, called Capitol Towers at Carnegie and proposed for Carnegie Boulevard and Congress Street, would total around 480,000 square feet, according to Matt Russell, marketing manager with Lincoln Harris. With the total square footage of the SouthPark office submarket at about 4.1 million, according to Jones Lang LaSalle, the new buildings would increase the total square footage by roughly 10 percent.

The third-quarter vacancy rate in the SouthPark market – in Class A and Class B buildings more than 15,000 square feet – was a lukewarm 13.4 percent, a rate not exactly begging for two massive buildings to be added to the fold.

But Taylor Allison, a research analyst in the Charlotte office of Jones Lang LaSalle, said the 597,850 vacant, available square feet in SouthPark comes mostly in small blocks of space and said the large, contiguous office space craved by big corporations is nearly nonexistent.

“I think the premise behind the Lincoln Harris buildings is that there is a huge lack of large contiguous space,” Allison said. “You see quite a bit of tenant movement, but it’s in the small square footage.”

SouthPark has long been known as one of the preeminent office submarkets in the city, but even so wasn’t able to escape the stranglehold of the recession, when no new office space was built in the market.

Allison said the last office space completed in SouthPark was Piedmont Town Center – the mixed-use commercial development off Fairview Road – back in 2006. Large users haven’t had many options in the submarket since, he said.

“From what we’ve looked at in the market, there are some large users looking (for space),” he said. “They may not even be out-of-market users, but big companies (from Charlotte) looking to consolidate multiple offices.”

Construction on the two 10-story, 240,000-square-foot towers is expected to start by June, according to Russell. The buildings will be built on roughly 6 acres, which Lincoln Harris must still buy before construction can begin.

According to Mecklenburg County tax records, the parcel in question comprises a total of 9.725 acres, although based on preliminary renderings Lincoln Harris won’t buy the entire parcel. The tax value on the land is $25.2 million and it last sold in 2012 for $21 million, records show.

In addition to the two office buildings, Lincoln Harris would also look to build about 5,400 square feet of retail space and a seven-story parking deck on the property, Russell said. In order to develop the property this way, the developer needs approval on a site plan amendment.

Lincoln Harris plans to bring two office buildings to this site in the SouthPark office submarket, where no office space has been completed since 2006. Photo by Payton Guion.

It’s unclear what exactly Lincoln Harris has planned for the two office buildings, whether the developer will build them on spec or if it has started early negotiations with a big user. No one with Lincoln Harris would comment on potential tenants.

Allison said best case would be to lock up a single corporate user that would occupy most or all of both buildings, similar to what happened at the Gragg and Woodward buildings when MetLife came to Ballantyne. He also said that Lincoln Harris is expected to begin construction on at least one building whether a tenant is signed or not.

“It’s not unrealistic to think they could get a single corporate user, considering what MetLife did,” he said, but added that it may be more likely that Lincoln Harris will snag an anchor tenant early and allow smaller tenants to fill in around it.

A similar thing happened at Sharon Square, a 105,000-square-foot office building near Sharon and Fairview roads, where SunTrust Bank was inked to 43,000 square feet, Allison said.

“It may be easier for them to (fill up the buildings) this way,” he said. “With a major tenant you have something you can hold on to.”