Raleigh’s changing skyline: Why you won’t see this familiar sign for much longer
For over a decade, Wells Fargo’s logo in bright yellow font has sat atop Capitol Center’s 400-foot skyscraper at 150 Fayetteville St. in downtown Raleigh.
But one of the most prominent signs dotting the city’s skyline is soon coming down.
After its lease expired last month, Wells Fargo opted not to renew, Wells Fargo spokesperson Josh Dunn confirmed this week, citing “consumer and economic trends.”
In this post-pandemic era of hybrid work and surging interest rates, the big bank is now downsizing its footprint and reassigning employees at Raleigh Capitol Center to “existing, available workspace” in other buildings.
No jobs will be lost, he stressed.
“This is a real estate consolidation,” he told The N&O in an email. “We have more real estate than we need.”
The company’s decision to vacate the space was first reported by the Triangle Business Journal.
Wells Fargo wouldn’t give an exact headcount on how many employees are impacted. It’s also unclear how much space is being vacated.
The building’s owners, Raleigh-based Highwoods Properties, did not immediately respond to a request for comment. The real estate investment trust purchased the building in 2021 for $148 million, TBJ previously reported.
The 29-story building offers a total of 550,538 square feet. According to its website, it currently has around 70,000 square feet vacant and available for lease.
Once a key piece of the Warehouse District, this office building is now up for direct lease
Vacancy rate is highest since 2004
Wells Fargo joins a growing list of a high-profile companies scaling back on their real estate as vacancy rates hit record highs.
As subleases expired and new projects — like Highwoods Properties’ GlenLake Three in the Glenwood/Creedmoor submarket got delivered — direct vacancy rose to 15%, according to CBRE Raleigh Research’s 2023 fourth-quarter market report released this week.
Overall vacancy rose to 19%, the highest level registered since 2004, the report said.
Among other notable office spaces sitting empty on the market: Citrix’s former headquarters located in the heart of Raleigh’s Warehouse District and Imperial Tower, one of the most visible and iconic towers overlooking I-40 in Durham.
On the plus side: Sublease availability, where the original tenant subleases space to a new tenant, dipped to 3.5 million square feet of space available, said CBRE Raleigh’s senior research analyst Elizabeth Gates.
That’s down from 4 million square feet in the third quarter after hitting a record high of 4.4 million square feet in March 2023.
The drop in such a short amount of time, she said, is due to “a combination of leasing activity and master-lease expirations,” and is an encouraging sign.
“It signals that the office sector is past the worst of this challenge,” Gates said.
In the short term, however, vacancy is expected to continue to climb as the construction pipeline empties and tenants continue their “flight to quality,” where newer properties attract the lion’s share of interest.
Five buildings totaling just over 1 million square feet remain under construction, with all the space scheduled for delivery by mid-2024. The greatest share of the space — 737,000 square feet — is in The Exchange Raleigh, the billion-dollar mixed-use project currently under construction in midtown Raleigh.
In the meantime, say analysts, conditions are ripe for investors to find opportunities to rezone and redevelop some of the market’s aging office stock.
Tenants can also find some deals, said Derek Jacobs, a Raleigh-based analyst with Avison Young.
“Office users interested in leasing or buying new space will likely find some incredible options on the market right now that wouldn’t have been there even as recently as two years ago.”
