May 11--A local developer plans to break ground this year on the first of two office buildings in northern Chapel Hill, hoping to tap demand in one of the Triangle's tightest office markets.
Bryan Properties of Chapel Hill wants to start construction in September on Dawson Hall, a 73,000-square-foot office building at The Campus on VilCom Circle. It is to be completed about 12 months after construction begins.
Bryan doesn't have any tenants for the building, but the company decided it was the right time to move forward anyway.
"The market has tightened up in the Triangle in general, but in Chapel Hill in particular," said D.R. Bryan, president of Bryan Properties. "There's not much in the pipeline. And we had an opportunity."
Only 6.8 percent of the leasable offices in Orange County were vacant at the end of March, according to preliminary figures from Karnes Research. The regional office vacancy rate was 13.2 percent. On Wednesday, Bryan paid Chapel Hill media company VilCom $3.5 million for 12 acres to build the offices.
Dawson Hall would be the third building in the office park, which has grown by fits and starts. The park, off Weaver Dairy Road near the intersection of N.C. 86 and Interstate 40, came to life in the late 1970s when the 42,000-square-foot McClamroch Hall was built. In 1999, VilCom won approval for three more buildings.
That paved the way for the 51,000-square-foot Boyd Hall, which was finished in 2001, just as developers were swamping the Chapel Hill market. Construction projects expanded the market's supply of leasable offices by 55 percent, to about 1.1 million square feet.
Then the technology bubble popped, and the submarket's vacancy rate jumped from 7 percent at the beginning of 2001 to 30.3 percent at year's end.
But the market has recovered. The vacancy rate dipped below 10 percent in 2004 and has stayed there since.
The tightness has prompted several developers to consider projects in Chapel Hill. A partnership called 501 Eastowne Associates was building about 39,000 square feet of offices at the end of the third quarter, according to Karnes. And there were about 205,000 square feet more proposed.
Meanwhile, Capital Associates is working on plans to build about 400,000 square feet of offices on N.C. 54, about a mile from Interstate 40, by 2012. Those would compete with planned offices at Palladian Corporate Center in Durham, which is near the Orange County line.
Bryan, whose company developed 251,500 square feet of commercial and residential space at Southern Village in southern Chapel Hill, said he isn't worried.
Bryan said the fourth building would be built as soon as 75 percent of Dawson Hall is leased. That could be as soon as September 2008, he said.
[News & Observer, The (Raleigh, NC) (KRT) -- 05/12/06]
