Highwoods Plans 600,000-sf, $80-Mil Office Complex in University Area

"We're always worried about it (office vacancies), but we make long-term investment decisions," Tom Cochran, Highwoods senior vice president, tells Globest.com.

The Raleigh, NC-based REIT paid automotive supplier Collins & Aikman $9 million or $160,714 per acre ($3.69 per sf) for the dirt.

Cochran terms the site of the planned project in a suburban office area at W.T. Harris Boulevard and Interstate 85 in the midst of University City as "a premier undeveloped location that is one of the last, great mixed-use development sites in the suburban market."

Highwoods plans at least four buildings, with the first starting before the end of the year. The project could take five to seven years to complete. Cochran says he does not know what rent rates will be set at the $80-million development.

Brokers say rates for class B space in the area start at about $17.50 per sf, while class A runs around $19 per sf. The northeast or University area's vacancy rate is on the decline and was down to 18.8% at the end of last year, which was still more than double the 9.3% citywide rate according to the Karnes Research Co.

Several other projects are under way in the area including Crescent Resources Inc.'s 150,000-sf Five Resource Square. High Associates Ltd. has also started the first of two 100,000-sf buildings.

Altogether, Cochran says there is about a half million sf under construction to swell the current two million sf inventory. But he says Highwoods is not worried about leasing the new buildings up largely because of the upscale product that will be offered and the prime location.

"All the retail needs that you could possibly imagine are right across the street," he says. "There's also a convergence of fast food restaurants. There's fabulous traffic, and from a transportation standpoint, this is one of the focal points of mass transit plans being discussed in the county."