The new structure will complement the Raleigh, NC-based developer's existing, same-size Capital Plaza I and II buildings and a 167-room Embassy Suites hotel at the East Pine Street complex. About 15,000 sf of retail will also be developed in the office building.

The new spec-built office space is only one component in a planned $100-million, mixed-use undertaking Highwoods and Orlando hotelier Richard Kessler plan for the 2.2-acre site at the southeast corner ofRosaline Avenue and Pine Street.

Kessler expects to break ground also by year end on a seven-story, unbranded hotel at the same site, according to preliminary plans filed with the city. Kessler completed the 250-room, $100-million Westin Grand Bohemian Hotel across from City Hall Downtown in 2001. Mayor Buddy Dyer formally announced the projects April 26.

A second 13-story tower will house 121 residential condos atop five levels of parking. The 15-story office tower will be built atop eight levels of enclosed parking space. The entire project is expected to be completed in phases in 2007 and 2008.

Sources close to the Highwoods development tell GlobeSt.com the developer has planned the new project for the past two years. The same sources said Highwoods scratched an original blueprint for a new single, 450,000-sf office building when local trends in the past 18 months showed Downtown's 57,000-person workforce were buying condos that were within walking distance of their jobs in the central business district.

Highwoods owns five existing Downtown office buildings totaling about one million sf with average occupancy at 96%, Downtown brokers tell GlobeSt.com. Cameron Kuhn, a former Chicago homebuilder, owns 21 class A and B office buildings Downtown totaling about two million sf, according to GlobeSt.com research.

Both Highwoods and Kuhn have completed numerous acquisitions in the past two years from the same seller, locally based Capital Partners headed by James Heistand, as GlobeSt.com previously reported. A total 12,000 new and converted condominium homes have been completed or are nearing completion in the five-county metro area, according to GlobeSt.com research. In Downtown alone, there is $2 billion worth of mixed-use projects under construction or preparing to break ground.

The 7.6-million-sf Downtown submarket currently is 9.6% vacant with 734,241 sf of available space, according to Jeffrey Sweeney, managing principal and president of locally based Grubb & Ellis/Commercial Florida. There is 545,909 sf of new product under construction. Class asking rents average $24.47 per sf; class B, $23,02 per sf. First-quarter net absorption totaled 377,224 sf.