Steelhead Development to Renovate Building into Individual Office Units in Raleigh

Nov. 17--RALEIGH -- A group of local investors has bought a Hillsborough Street office building, with plans to renovate it and sell individual units.

Hoping to capture demand for downtown office condominiums, Steelhead Development of Raleigh last month paid 711 Partners of Raleigh $3.28 million for the 32,000-square-foot building at 711 Hillsborough St., according to Wake County records.

Capitol Broadcasting, which operates radio stations in the building, is leasing about 20,000 square feet until late 2007, said Britt Hopkins, a Steelhead partner. Steelhead is negotiating with Capitol to stay longer.

Steelhead plans to spend about $1 million on interior and exterior renovations beginning a year from now, Hopkins said. Steelhead is exploring the possibility of adding another 14,000-square-foot floor to the building.

Steelhead is to begin marketing units as small as 3,000 square feet early next year. Pricing has not been determined.

Investors have switched from renting to selling units in properties of all kinds as low long-term interest rates convince more small businesses and individuals to buy.

Triangle Commercial converted Madison Centre in the South Square area of Durham into 26 for-sale, 1,000-square-foot units. Although interest rates have been creeping up, Hopkins said demand for the units will last.

"Potentially, the cost of owning an office condo would be a slight bit more than what you would lease space for downtown, if you break it out over a 30-year period," Hopkins said. "And you'd own your own piece of downtown Raleigh.

"At the end of a five-year lease, you have nothing."