Two stories with interesting interplay in the papers of late.
Jack Hagel, the terrific real estate reporter for the N&O, continues his focus on Durham in today's paper. (Hagel broke the news of James Scott Farrin's relocation to downtown Durham and, with Anne Blythe, has cleaned up on coverage of West Village issues.)
Hagel notes something that we here at BCR have heard rumors of: that third-party investors have approached lawsuit-bedgraggled West Village principals Christian Laettner and Brian Davis about buying out the debts stymying the completion of the massive Chesterfield building, bringing in new money and new blood to the project.
"But no decision is imminent, and Davis and Laettner don't seem interested," Hagel writes. We've heard the same thing, with an added proviso that finding a price level reasonable to both prospective buyer and seller can be challenging at times.
As Hagel notes, the strong demand for apartments and office space at West Village -- the apartments are essentially fully-leased, with office space 80% leased -- means that the project is likely to be a winner whoever finishes it.
That said, one of the key drivers of office space lease-up has been Duke University, who's strategy of moving administrative functions off-campus to leased office space, primarily downtown, has been a boon to both campus and university.
And there are signs, most recently in the Duke Chronicle student paper, that such leasing is coming to a halt, at least for now.
Duke overall leases almost 30% of all office space in Durham, according to a university economic impact study commissioned by the Duke and cited in the Chronicle.
The university's commitment to leasing space downtown has been a win-win for all parties. Downtown developers get a highly credit-worthy tenant committing to long term deals that help projects win financing or improve values. Cases in point: American Tobacco (housing Duke IT and financial functions); the once-struggling Durham Center tower (where the Duke Clinical Research Institute's arrival filled a 30%-vacant office building); and West Village (where everything from the university's architect to community service functions to recently-added finance and audit staff have moved.)
From the university's perspective, these moves frees up on-campus space for more core-mission activities of teaching, research and patient care -- while also helping Durham to revitalize, a trend that makes Duke itself more attractive to prospective faculty, staff, students and parents.
But then, Duke won't be expanding in the near future as it has in the past, given the economic climate. And the Chronicle's report makes clear that one thing unlikely to expand is downtown office space:
Executive Vice President Tallman Trask said although the University will meet all of its current obligations and pledges in terms of investment, it will not be entering into any more commitments in the foreseeable future.
"We made it clear in the beginning we would do our share, but now it's time for others to do theirs," he said. "There's momentum downtown and other companies are moving down there and they wouldn't have been if Duke hadn't started five years ago."
On the flip side, such a move is taking place after all the projects above have benefitted from long-term leases with Duke offices. And Carl Webb's comment yesterday that prospective tenants are interested in seeing the Woolworth site office tower move forward downtown suggests that even without Duke, there's business in the pipeline to support that project.
Which, of course, was exactly what Tallman Trask and other university leaders were probably trying to accomplish with downtown investment in the first place.
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