With the nation's housing woes spreading to commercial real estate in the Charlotte NC Real Estate market, developers are seeking innovative projects that were able to keep working. Two Development partners believe they've come up with one for Charlotte Homes in Ballantyne Commens Pkwy., Stonegate Business Center. The project combines seven 2 and three story office buildings with a four-story climate controlled storage facility designed to look like an office building. Tenants can lease space as in a suburban business park or take the less common step of buying it as an office condo. "It's a niche product," said real estate analyst Frank Warren Warren and Associates. "But they're hitting a portion of the market geographically where this concept can work in Charlotte NC Real Estate." Blakeney, an office retail residential development on Rea Road south of the Stone Gate site, has demonstrated that office condos appeal to buyers in the greater Ballantyne area, he said. Stone Gate partners Randy Smith of Landmark Development Partners and Ed Estridge of JED Holdings say they saw a market and a potential next big thing when they acquired a 7 acre tract in late 2007. They believe low interest rates will help fuel demand for office condos, encouraging tenants to buy rather than rent. In this economy with the stock market so volatile, business owners are looking for two alternatives, they said. What better place to invest in office condos? Investors indeed are looking past the jittery stock market, Warren said. They want to put their money in a more concrete asset.
Office condos, which have been around since the 1970’s, gained popularity in the 1990s as small and medium-sized business owners sought to control operating costs while claiming a stake in the commercial real estate market. Projects range from the Lake Norman NC area on the north to the deep south Mecklenburg County NC Real Estate areas, but real estate analysts believe office condos still represent less than 5% of the Charlotte area market. Medical professionals are major purchasers, but Stone Gate’s zoning is for general offices such as accountants, Real Estate firms, and Insurance Agent’s.
Office condos like any real estate investment, carry risk, said real estate broker David Dorsch of Colliers Pinckard in Charlotte. But, if the user plans to be there 5 to 7 years almost regardless of the cycle, he is going to make money on Ballantyne Commens Parkway, he said. The city Council approves Stone Gate’s petition to rezone the property on Ballantyne Commens Parkway for multifamily residential in November after negotiations with nearby neighborhood representatives in Charlotte Mecklenburg planners. Designing storage facility with executive suites across the front to create the façade of an office building" cooperating with neighbors on screening and buffering were key, said planner Tim Manes. The developers said that they will work to preserve large trees on the site and build a wooden fence with concrete pillars along the property line. They plan to develop in phases, starting site work for the first office building in the $22 million project probably by the third quarter of 2009 and concluding eventually with the storage facility. Warren said that timetable sounds workable. They are giving themselves some time to market the project and giving the economy time to start getting some indication of direction, he said. Smith said Stone Gate is working with CommunityOne Bank on financing herself on the first two office buildings necessary. The storage facility is likely to appeal to squeezed south Charlotte residential condo owners. They will be about half the size but similar in design to another project he plans with partners on W. Morehead St. The rezoning allows for up to 78,000 sq. ft. of offices, 93,000 sq. ft. of storage, and 7,800 sq. ft. of executive offices
Office buildings, 12,000 28,000 sq. ft in size, will lease in the mid-to upper $20 per sq. ft. annually and sell for $220 per sq. ft. in shell condition to be finished out by the purchaser. With about 800,000 sq. ft. of leased office space nearing completion this year in the Ballantyne-NC51 area, competition will be tough. Substantial office condo space also became available earlier this year near the Downtown Charlotte NC Real Estate urban core, where tenants seek to be near uptown without paying expensive center city rental rates. Merrifield Partners recently completed 1927 S. Tryon St., an 80,000 sq. ft. office condo building. And MECA Properties and its two venture partners are finishing up renovation of the 68-year-old, 58,000 sq. ft. General Dyestuff Corp. building on Wilkinson Boulevard as an office condo project named Dyestuff Commercial Lofts.
