Open Source: IBM sells Triangle campus for $66 million. What’s the new owner got planned?

I’m Brian Gordon, tech reporter for The News & Observer, and this is Open Source, a weekly newsletter on business, labor and technology in North Carolina.

IBM has been with Research Triangle Park since nearly the beginning. The park formed in 1959, but it was the arrival of Big Blue in the 1960s that gave the fledgling business and research zone its lasting legitimacy.

The company remains in RTP today, but the recent sale of its four-building campus just outside the park illustrates how both IBM and the area seek to evolve.

On Dec. 14, the Houston-based Hines Global Income Trust acquired the IBM 500 Campus for $66 million. It’s a sale-leaseback, meaning IBM will remain the sole tenant — at least for now.

Hines is the development firm behind local mixed-use projects like Fenton in Cary and Durham’s Market District at American Tobacco. As Research Triangle Park looks to transform itself with more housing, shops, and even a drinking district, Hines too acknowledges the 774,000-square-foot campus it just acquired from IBM could be more than just an office space.

I spoke with Paul Zarian, a managing director at Hines in Raleigh, about his firm’s splashy purchase. The interview has been lightly edited for clarity.

N&O: Is the expectation that IBM’s presence at the campus will be temporary? Or might the company remain long-term as mixed-use development arises around it?

Zarian: That is to be determined in the future. Although we can’t speak for IBM, it is apparent that they are focused on creating the best environment for their employees. That could take a number of different forms. (Zarian said Hines was unable to disclose the length of IBM’s lease).

N&O: With the 500 Campus, does Hines envision remodeling the four buildings or more likely tearing down the structures to rebuild?

Zarian: For 500, it is too early to tell. Historically, we’ve done a mix of both, not only across our portfolio but locally as well. Fenton and the Market District are exclusively new construction. Waverly (a retail center in Cary) was an acquisition of an existing asset, and we are rezoning it to add residential options while keeping the majority of the buildings in place.

Ultimately, the thought is that if we can work with what’s there — if it is successful or if we can shape it in a way where it can become successful — that’s the priority. Sometimes you can do that, and sometimes what our customers are asking for is so different than what currently exists that it makes sense to start from a blank canvas.

N&O: Does the fact that IBM 500 sits right outside RTP have any governance implications? Like with permitting or building approvals?

Zarian: Yes, RTP has covenants that date back to when the park was founded over 60 years ago, were meant to add a layer of approvals that ensured a consistency of vision and execution. By design, they limit what an owner can do with its property. There are pros and cons to that, and RTP is rethinking that approach through initiatives like RTP 3.0. Property outside of RTP is not bound by those same covenants and instead governed by the municipalities.

N&O: Mixed-use is an encompassing term. What part of “mix” do you see tenants/customers currently demanding the most locally?

Zarian: It depends on the product, but in general it is convenience and an experience that attracts someone to the point where they want to spend their time there. Everyone has choices today, and you have to create the right format to earn your customers’ business.

N&O: Historically, RTP has been secluded from its surrounding population areas. It had no housing and no efforts were made to get commuting employees to stick outside of the work day. How does Hines hope to best connect the 500 Campus to the surrounding communities?

Zarian: Historically, that is correct, and is one of the reasons why the Research Triangle Foundation conceived of RTP 3.0. If the 3.0 initiative moves forward, it has the potential to add residential to the area, which is a key ingredient in supporting additional amenities.

States settle antitrust case with Google. Epic Games is not pleased.

Google will pay $700 million to end an antitrust lawsuit brought by 53 attorneys general, including North Carolina AG/gubernatorial candidate Josh Stein. The attorneys general accused Google of harming consumers by maintaining an illegal monopoly in its app store.

The settlement did not sit well with Cary’s Epic Games, which last week won its own antitrust trial against Google.

“The State Attorneys General settled with Google before trial to get a one-time payout with no true relief for consumers or developers,” Epic’s vice president of public policy Corie Wright said in a statement.

Next up, the judge in the Epic v. Google case will determine what the recent jury verdict will mean. The Cary-based creator of Fortnite said it “will seek meaningful remedies to truly open up the Android ecosystem so consumers and developers will genuinely benefit from the competition that U.S. antitrust laws were designed to promote.”

Durham worker fatally fell through plywood

In July, a 51-year-old welder named Ricardo Aguilar Aleman was killed while working as a contractor at the headquarters of the semiconductor producer Wolfspeed in Durham. According to the North Carolina Department of Labor, Aguilar Aleman fell through a hole that had been covered with plywood, dropping 14 feet from a second floor onto the concrete below.

This week, the state fined Aguilar Aleman’s employer, Raleigh-based Southern Industrial Constructors Inc., for two workplace safety violations. The total penalty is $20,825, including a maximum $15,625 fine for not properly securing the hole he fell through.

Southern Industrial, which can appeal the state’s finding, said it had “no comment” about the investigation results. A spokesperson for NCDOL said “the penalties are in no way designed to make up the loss of life.”

Short Stuff: As drone company ends, another begins

• A concrete factory in the town of Oxford will close after 29 years. Its owners cited slowdowns in office and multifamily housing construction — plus higher interest rates. One local official thinks impacted workers will find new manufacturing jobs quickly.

• The drone company PrecisionHawk will close its downtown Raleigh headquarters in Glenwood South after filing for Chapter 7 bankruptcy. As one company ends, another begins: Last month, a team of former PrecisionHawk executives announced a new Raleigh venture, called Cloneable, which seeks to deploy “intelligent applications on edge devices” like tablets, robots, and yes, drones.

• Speaking of shutting down, does AgBiome still exist? In October, the biotech firm in Research Triangle Park warned it could potentially layoff all 123 of its employees by Dec. 15 if it did not secure additional funding or work out another deal. I reached out to the company this week to find out what’s happened but have yet to hear back.

National Tech Happenings

• An Apple Watch ban is likely coming soon. Why? An intellectual property dispute.

• Deep space kitty. NASA engineers streamed high-definition footage of an orange cat named Taters from a record 18.6 million miles away.

• Does Mark Zuckerberg’s top-secret $100 million compound in Hawaii have an underground bunker? You already know the answer.

Thanks for reading. This newsletter will be on a break next week and will return in the new year. Happy holidays!

Open Source

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