offering memorandum 20 tw alexander drive 20 tw alexander

EXCLUSIVELY MARKETED BY:
OFFERING MEMORANDUM
20 TW ALEXANDER DRIVE
FINAL
20 TW
ALEXANDER
This Offering Memorandum is intended solely for your use to determine whether you wish to express an interest in 20 TW Alexander
Drive in Durham, NC. Disclaimer. Although information has been obtained from sources deemed reliable, JLL and/or JLL
representatives, brokers or agents make no guarantees as to the accuracy of the information contained herein, and offer the Property
without express or implied warranties of any kind. The Property may be withdrawn without notice. If the recipient of this information has
signed a confidentiality agreement regarding this matter, this information is subject to the terms of that agreement.
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients
seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.7 billion and gross revenue
of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000.
On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square
feet, or 316.0 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment
management business, LaSalle Investment Management, has $53.6 billion of real estate assets under management. JLL is the brand
name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
For more information, please contact:
Pam Michael
Executive Vice President
919.424.8173
[email protected]
Bill Sandridge
Managing Director
919.424.8174
[email protected]
2
EXECUTIVE SUMMARY
4
PROPERTY PROFILE
6
LOCATION OVERVIEW
11
MARKET OVERVIEW
15
LAB INVESTMENT SALE ENVIRONMENT
24
3
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
INVESTMENT SUMMARY
INVESTMENT HIGHLIGHTS
JLL is pleased to present an investment opportunity at 20 TW
Alexander Drive, Research Triangle Park, North Carolina, a 163,171
square foot multi-story Office / R&D building. This building is situated
on approximately 41.548 acres.
• Easy access to I-40 and Highway 147
• Frontage on TW Alexander and East Cornwallis Road at a
signalized intersection
• 36,579 square feet of existing lab space of which approximately
67% is Analytical Lab
• 341 parking spaces
• Region ranks 1st in country for Bachelor Degrees
• Market demand for lab space
• Eat-in cafeteria
• Fitness center
Located in the world renowned Research Triangle Park, a home to
200 global companies across 7,000 acres of prime real estate, 20
TW Alexander sits in the heart of the Triangle with convenience to
the Raleigh-Durham International Airport (9.1 miles).
20 TW ALEXANDER
5
PROPERTY PROFILE
PROPERTY PROFILE
PROPERTY DESCRIPTION
SITE
Address:
20 TW Alexander Drive
Jurisdiction:
City of Durham, Durham County
Acreage:
41.548
Survey Plat:
Durham County BK 138 / Page 97
Parcel Ref No:
157255
Landscaping:
Corporate Campus Setting
Irrigation:
Yes
ZONING:
SRP (Science Research Park) by City of Durham
PARKING
341 spaces; 9 handicap accessible
ADJACENT 15.843
ACRE PARCEL
BUILDING
Year Built:
1998
Square Footage:
163,171
Construction Type:
Fireproofed structural steel
Building Depths:
Main lab floor is approximately 204 ft. 4 in (W) by 397
ft. (L) with a 10 ft. service corridor between each lab
wing, measuring 97 ft. 2 in. (W) by 397 ft. (L).
Clear Heights:
16’ for labs on ground & first levels; 14’8” for labs
on second floor level; service corridor first floor level
17’3” to bottom of steel & ground floor service
corridor 14’7” to bottom of steel
Entrances:
Eight (8)
Dock Doors:
Two (2) dock high door available
7
PROPERTY PROFILE
PROPERTY DESCRIPTION
ROOF
Construction:
•
•
Warranty:
10 years, August 31, 2008
Access:
Internal stairway by employee entrance
Sarnafil Roof
Installed in 1998
UTILITIES
Water:
City of Durham
Sewer:
City of Durham
Electric:
Duke Energy
Natural Gas:
PSNC Energy
PLUMBING
Back Flow preventer
ELECTRICAL
•
•
Two (2) 4000 amp main service entrances
1500KVA and 2000KVA Transformers (227/480V 3 Phase)
HVAC
One (1) 1,000-ton & Two (2) 385-ton chillers; One (1) Boiler
(original). Chillers original but 1000 Ton and one of small
units recently refurbished. All use HCFC refrigerants.
GENERATOR
1865KVA Generator
LIFE SAFTEY
Sprinkler systems. Wet, dry and chemical.
OFFICE
39,487 SF traditional office
LAB
•
•
•
6,356 SF Biology
24,648 SF Analytical
5,575 SF Chemistry
•
•
•
•
Fitness Center
On-site cafeteria
Large training room
Well-appointed office and meeting spaces
ADDITIONAL
8
PROPERTY PROFILE
PROPERTY DESCRIPTION
OPERATING EXPENSES
2012
2013
2014
Electric
$527,304.72
$472,202.93
$453,599.16
Natural Gas
$236,630.25
$244,520.78
$229,123.22
Water/Sewer
$96,592.74
$87,229.22
$85,617.31
Total Maintenance
$142,011
$105,702
$395,682
PIN
Land Value
Building Value
Total Value
0739-04-71-0057
$3,013,560
$18,109,138
$21,122,698
0739-04-61-1589
$864,600
$
$864,600
0739-04-61-0215
$107,300
$
$107,300
0739-04-61-3009
$84,400
$
$84,400
TOTAL
$4,069,860
$18,109,138
$22,178,998
2015 TAX VALUE
9
Ground Floor
20 TW ALEXANDER DRIVE
163,171 square feet
10
First Floor
20 TW ALEXANDER DRIVE
163,171 square feet
11
Second Floor
20 TW ALEXANDER DRIVE
163,171 square feet
12
LOCATION OVERVIEW
20 TW ALEXANDER
S MIAMI BLVD.
AMENITIES
HIGHWAY 55
AMENITIES
14
LOCATION OVERVIEW
AMENITIES
HIGHWAY 55
DINING
Aladdin's Eatery
Applebee’s
Azitra Authentic Indian Fare
Bob Evans
Brasa Brazilian Steakhouse
Brizz Wood-Fired Pizza
Bruegger’s Bagels
Caribou Coffee
Carolina Ale House
Champa Thai & Sushi
Chili’s Grill & Bar
Cold Stone Creamery
Dairy Queen – Orange Julius
Elevation Burger
Firewurst
Flame Kabob
FujiSan Japanese Steakhouse
Gigi’s Cupcakes
Greek Fiesta
Hayashi-Ya Japanese Restaurant
Hibachi 101
Jason’s Deli
Johnny Carino’s Country Italian
Lime Fresh Mexican Grill
Longhorn Steakhouse
Maggie Moo’s Ice Cream & Treatery
McDonald’s
Moe’s Southwest Grill
Noodles & Company
O’Charley’s
Panera Bread
Red Robin Gourmet Burgers
Slice of NY
Starbucks
SOUTH MIAMI BOULEVARD
Subway
The Rocky Mountain Chocolate
Factory
Which Wich?
Wild Wind Cafe
SHOPPING
Barnes & Noble
Best Buy
BJ’s Wholesale Club
Dicks Sporting Goods
GNC
Goodwill
Hallmark
Homegoods
Kay Jewelers
Mattress Warehouse
Men’s Warehouse
Michael’s
Party City
PetSmart
Pier 1 Imports
Ross Dress for Less
BB&T
Blo Hair Salon
Brier Creek Cleaners
Brier Creek Dental Studio
European Wax Center
Eye Care Associates
Great Clips
Main Pedi Nail Spa
Massage Envy
Plant Beach Tanning Spa
Salon Blu
Skin Sense Day Spa
Sprint
The UPS Store
T-Mobile
Verizon Wireless
HOTELS
Embassy Suites
Hampton Inn & Suites
DINING
Arby’s
Bojangles’
Burger King
Cilantro Mediterranean Grill
Fortune Asian Bistro
Jake’s Wayback Burgers
Jimmy John’s
McDonald’s
Mez Contemporary Mexican
Page Road Grill
Randy’s Pizza
Starbucks
Wendy’s
Wok ‘n Grill
SHOPPING
Office Depot
Sam’s Club
Walmart Supercenter
SERVICES
Rack Room Shoes
Staples
Target
T.J. Maxx
Total Wine & More
Walmart Supercenter
Atlantic Tire & Service
BB&T
Bright Horizons
Coastal Federal Credit Union
FedEx Office
Fitness Connection
Great Clips
QD Nails & Spa
State Employees Credit Union
Verizon Wireless
SERVICES
HOTELS
Advance Tailors
Bank of America
Holiday Inn Express & Suites
Homewood Suites
Sheraton Hotel & Convention Center
Springhill Suites
Wingate by Wyndham
Candlewood Suites
Extended Stay America
15
RTP / RDU SUBMARKET
The Research Triangle Park (RTP); home to more than 200 global companies,
fosters a culture of scientific advancement and competitive excellence.
Centrally located between Duke University in Durham, North Carolina State
University in Raleigh and The University of North Carolina at Chapel Hill, the
submarket is home to a dynamic employment base. In additional, adjacency
to the Raleigh-Durham International Airport adds to the attractiveness of this
submarket’s location. As such, this submarket is one of the largest in the
Triangle metro, accounting for 13% of the market’s total office square feet.
As in other submarkets in Raleigh-Durham, much of the inventory in this
submarket is low-rise or mid-rise with large footprints. However, in the RTP,
most of the buildings and tenant are large: 60% of buildings are larger than
100,000 square feet, nearly 100 office-occupying tenants have a footprint
greater than 25,000 square feet and approximately 40% of the buildings are
occupied by a single tenant.
As the most significant employment core in Raleigh, the RTP is a sprawling
7,000-acre campus housing more than 39,000 employees, according to the
Research Triangle Foundation of North Carolina. The RTP strictly requires the
buildings within its boundaries to be primarily research and development
space, so only a small share of office space actually exists within the RTP
proper. Nortel Networks, Cisco, IBM, BASF and Quintiles are some its globally
recognized tenant list. However, this submarket has been a serious magnet
for office users seeking close proximity to the global, heavy-hitting technology
and pharmaceutical players.
16
LOCATION OVERVIEW
LOCATION OVERVIEW
MARKET OVERVIEW
MARKET OVERVIEW
MARKET OVERVIEW
Inventory
Rent growth
since Q1 2014
11,525,665 s.f.
2.4%
17.1%
$20.78 Full Service
7,906,240 s.f.
3.6%
14.8%
$11.97 NNN
13,806,847 s.f.
7.8%
5.7%
$4.97 NNN
Office*
44,185,719 s.f.
2.8%
13.4%
$21.49 Full Service
Flex**
20,970,202 s.f.
3.1%
12.4%
$10.54 NNN
Warehouse**
67,910,545 s.f.
1.8%
8.3%
$3.61 NNN
Overall Vacancy
Average asking rent
RTP / RDU SUBMARKET
Office
Flex
Warehouse
ALL SUBMARKETS
*Data includes office properties over 15,000 s.f.; excludes all owner user s and medical office
**Data includes properties over 15,000 s.f.; excludes all owner users
1
2
RALEIGH-DURHAM SUBMARKETS
1.
2.
3.
4.
5.
6.
North Durham
Downtown Durham
South Durham
RTP / RDU
Cary
Southwest Wake
County
7. West Raleigh
8. Downtown Raleigh
9. Glenwood / Creedmoor
10. Six Forks / Falls of Neuse
11. Route 1
12. Eastern Raleigh
3
10
9
11
4
20 TW ALEXANDER
5
7
8
12
6
18
MARKET OVERVIEW
MARKET OVERVIEW
Educational Attainment: Bachelor’s Degree Index
Employment Growth (2014 - 2019)
20%
NYC
15%
Boston
San Diego
15%
7%
7%
Raleigh
120
Raleigh
6%
5%
5%
San Diego
Boston
NYC
0%
US Average Indianapolis
133
157
Indianapolis
116
US Average
100
0
Wage Index
100
120
108
99
101
90
Funds ($ Millions)
117
120
100
50
75
100
125
150
$600
3,000
$500
2,500
$400
2,000
$300
1,500
$200
1,000
$100
80
US Average Indianapolis
Raleigh
175
International Company Investment
130
110
25
San Diego
Boston
NYC
$0
500
2010
2011
2012
2013
19
Jobs
10%
5%
117
MARKET OVERVIEW
MARKET OVERVIEW | RTP/RDU SUBMARKET
Map Legend
Boundary of RTP proper
Influencing Office Park
Future Development Site
2,000
10,000
Major Employer Site
20 TW Alexander Drive
1,300
5,500
1,600
2,400
2015 Demographics
(Radius search from 4117 Emperor)
3-Mile
Radius
5-Mile
Radius
10-Mile
Radius
Population
19,194
92,254
475,194
Median Age
32.6
34.0
35.0
Total Households
8,244
39,465
195,249
Median Household Income
$74,604
$76,292
$63,515
Average Household Income
$97,618
$103,578
$89,785
65.4%
64.3%
55.4%
% of College Educated Workforce
Current conditions – market and submarket
RTP / RDU lab
Non-CBD
Raleigh-Durham
Peaking
market
Rising
market
Falling
market
Bottoming
market
Tenant leverage
Landlord leverage
1,148
20
Strong demand for lab and R&D
space across the country has
helped large life science
companies power a
disproportionate amount of officemarket growth recently, with
absorption occurring
2.9 TIMES FASTER IN
RALEIGH-DURHAM
than the greater United States.
MARKET OVERVIEW
MARKET OVERVIEW | LIFE SCIENCES
RALEIGH-DURHAM MARKET OVERVIEW
The Raleigh-Durham life sciences cluster is familiarly called the Research Triangle Region due to the geographic
nexus of the area’s three leading research institutions: Duke University, North Carolina State University and The
University of North Carolina at Chapel Hill. Squarely in the center of the region is the Research Triangle Park
(RTP), a 7,000-acre center of research created by the state to help bring R&D talent to the region.
Facilities scorecard
Supply
Raleigh-Durham
Rentable lab stock
The Triangle’s rich talent pool, stable socioeconomic structure, proximity to universities and high quality of life
has attracted some of the big names from the life sciences sector to the region. Agro-biotech firms have
displayed strong growth in the past few years. The region is already home to four of the top five ag-tech
companies including Syngenta, Bayer CropScience, BASF and Monsanto.
Direct vacancy
(Change year-over-year)
RESEARCH TRIANGLE PARK
Pricing
A majority of the lab spaces tracked in the Triangle is owner-occupied and include manufacturing space devoted
to pharmaceutical, biological or medical device & instrument manufacturing. There is a two-tier lab market with
modern lab facilities leasing in the $22.00 to $28.00 (NNN) per-square-foot range and dated lab facilities, roughly
10 to 25 years in age, leasing in the $17.00 to $20.00 (NNN) per-square-foot range. The existing supply pipeline
of quality lab space is fast diminishing, as there is a strong demand of technologically advanced space. Firms
looking to add additional lab space will most likely need to approach local developers to create a build-to-suit
facility. Given the current demand for lab space, opportunistic developers are redeveloping older assets to add
wet lab space. The asking rents of some of these newer facilities range from the mid to high $30's (NNN) persquare-foot.
Average asking rent (NNN)
(Change year-over-year)
The biggest challenge that this industry continues to face is the lack of funding for Research and Development.
The economic recession has by and large not affected the big firms located in the Triangle; however, the funding
environment has suffered a major setback. In the private sector, this has forced companies to look for creative
solutions to secure funding, specifically crowd funding. Over the past 12 months, multiple firms announced their
decision to go public by filing for IPOs. Triangle firms have taken advantage of the improving stock market
conditions and have raised money via IPOs to support long-stalled projects. As the economy improves, investors
are also looking to invest in firms that have strong growth potential. NephroGenex, INC Research, PRA Health,
Scynexis and Argos Therapeutics are some of the Triangle firms that filed for IPOs last year.
As the landscape of the life sciences industry continues to change, we expect firms directly and indirectly
connected to this sector to grow in the region. We expect to see more mergers and acquisitions, which will likely
lead to real estate consolidations. As a mature, established cluster, the Raleigh-Durham area has the necessary
infrastructure in place to support the life sciences industry.
From a pure numbers standpoint, the region ranks behind other established clusters in science and engineering
graduates and R&D capital as a percentage of state GDP. However, given the deep rooted presence of top
industry companies, a favorable living environment that attracts out-of-state professionals and ample
public/private interest groups in the area, the market has more than enough resources to sustain the growing
needs of the industry.
9.9 M s.f.
14.4%
+2.5 %
# of large blocks over 100,000 s.f.
2
0 s.f.
Under construction (s.f.)
$18.93 p.s.f.
+6.4%
**Supply includes office, industrial and flex buildings with lab
Average asking rent is based on current availabilities in the market
MERZ NORTH AMERICA
6501 Six Forks Road
Six Forks / Falls of Neuse
60,000 s.f.
Class A
Relocation
701 W Main Street (The Chesterfield)
Downtown Durham
284,000 s.f. available
Class A
*under renovation
PATHEON
4815 Emperor Blvd
RTP / RDU
30,865 s.f.
Class B
Expansion
ARGOS THERAPEUTICS
1733 TW Alexander Drive
RTP / RDU
97,500 s.f.
Class A
*investing $57 million in new bio
manufacturing plant
Activity key:
Leasing
Underconstruction
Largeblocksofspace
22
Life Sciences
manufacturing supply:
Major lab supply:
Clusters of manufacturing
space devoted to
pharmaceutical, biological or
medical device & instrument
manufacturing
Emerging lab supply:
Clusters of established
lab stock with longtime industry presence
Areas with limited lab
stock today that are
poised for growth
Economic scorecard
Workforce
Total life sciences
% life sciences to private employment
Growth
Employment
27,012
4.6%
1.2%
813
2.0%
5.2%
Total life sciences
% to total U.S.
VC funding
$262.6 M
3.1%
NIH funding
$893.1 M
4.0%
Innovation
Total life sciences
% to all patent classes
303
17.6%
Establishments
Orange County
Funding
North
Durham
85
6 Forks
Falls of
Neuse
Downtown
Durham
South
Durham
20 TW ALEXANDER
Route 1
Patents
Glenwood /
Creedmoor
*includes data from 2013-2014
RTP/RDU
Life sciences employment composition
40
Cary
West
Raleigh
5%
Downtown
Raleigh
440
Life sciences
employment:
45%
27,012
7%
Pharma & medicine manufacturing
non-lab
using
28%
East Raleigh
Electromedical instrument manufacturing
Medical equipment & supplies manufacturing
7%
Testing laboratories
lab
using
8%
Research & development
Medical & diagnostic laboratories
Historical life sciences employment
Life sciences patents by classification
Life sciences employment
30,000
% life sciences vs. total private employment
5.0%
1%
4.8%
25,000
20,000
4.4%
15,000
4.2%
10,000
4.0%
5,000
3.8%
3.6%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Medical equipment & instruments
34%
4.6%
2001
MARKET OVERVIEW
MARKET OVERVIEW | LIFE SCIENCES
65%
Life sciences
patents:
303
Pharmaceuticals & biotechnology
Crop science
2012
23
9000 Development Drive
North Carolina Technical Park
Newcastle North
PROPERTY:
9000 Development Drive
Morrisville, NC
PROPERTY:
1101 Hamlin Road
Durham, NC
PROPERTY:
SELLER:
Synthon Pharmaceuticals
SELLER:
ICON International
SELLER:
BUYER:
Novozymes North America
BUYER:
RENTABLE SF:
PRICE:
PRICE PSF:
CLASS:
DATE:
SUBMARKET:
COMMENTS:
30,500
$5,100,000
$167
B
December 2014
RTP / RDU
Owner-user sale
RENTABLE SF:
PRICE:
PRICE PSF:
CLASS:
DATE:
SUBMARKET:
COMMENTS:
MARKET OVERVIEW
SALES COMPARABLES
Easton & Associates
341,298 (5 properties)
$16,250,000
$48
B
August 2014
North Durham
Portfolio consisting of
industrial manufacturing
and office buildings
BUYER:
RENTABLE SF:
PRICE:
PRICE PSF:
CLASS:
1035 Swabia Court
Durham, NC
Rubenstein Partners, L.P.
Capital Square Holdings LLC
112,340
$14,500,000
$129
B
DATE:
March 2014
SUBMARKET:
RTP / RDU
COMMENTS:
100% leased to Reichhold
at time of sale
24
Imperial Center R&D Portfolio
PROPERTY:
SELLER:
Keystone Tech III
4222-4301 Emperor Blvd.
Durham, NC
Crown Realty & Development, Inc.
BUYER:
Longfellow Real Estate Partners
RENTABLE SF:
PRICE:
PRICE PSF:
CLASS:
DATE:
SUBMARKET:
COMMENTS:
188,191
$23,616,556
$125
B
February 2014
RTP / RDU
~76% leased at
time of sale
PROPERTY:
SELLER:
University Place IV
407 Davis Drive
Morrisville, NC
Guggenheim Real Estate LLC
PROPERTY:
SELLER:
BUYER:
RENTABLE SF:
RENTABLE SF:
PRICE PSF:
CLASS:
DATE:
SUBMARKET:
COMMENTS:
81,956
$19,445,000
$237
A
September 2013
RTP / RDU
~100% leased at
time of sale
4611 University Drive
Durham, NC
GRA Durham Associates LTD LLC
BUYER: Alexandria Real Estate Equities, Inc.
PRICE:
MARKET OVERVIEW
SALES COMPARABLES
PRICE:
PRICE PSF:
CLASS:
DATE:
SUBMARKET:
COMMENTS:
Blue Cross Blue Shield NC
100,000 (2 properties)
$10,000,000
$100
B
May 2013
South Durham
Purchase for redevelopment
25
LAB INVESTMENT SALE ENVIRONMENT
LAB INVESTMENT
LAB INVESTMENT SALE ENVIRONMENT
8%
1%
2%
REIT
Equity Fund
56%
33%
Corporate/User
Institutional
Private
Investment sale volumes (in millions of $)
LAB PROPERTY BUYER COMPOSITION (IN $), LAST 6 QUARTERS
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
Alexandria
RE Equities
Senior
Housing
Props Tr
DivcoWest
DivcoWest
Facebook
Principal
Real Estate
Investors
Starwood
Capital
Group
Legacy
Partners
HCP, Inc
LAB PROPERTY BUYER COMPOSITION (IN SF), LAST 6 QUARTERS
8%
12%
33%
REIT
Equity Fund
Corporate/User
Institutional
23%
Private
24%
Source: JLL Research
Square feet transacted (in thousands)
1,200
1,000
800
600
400
200
0
Senior
Housing
Props Tr
HCP, Inc
Starwood
Capital
Group
27
LAB INVESTMENT
LAB INVESTMENT SALE ENVIRONMENT
PRICINGS PREMIUMS FOR ASSETS IN INVESTMENT SALES
$1,200
Average asset pricing ($ p.s.f.)
$1,000
$800
$600
$400
$200
$0
Office, Stabilized
Lab, Stabilized
INVESTORS PAYING PREMIUM FOR VACANCY IN HIGH GROWTH LAB MARKETS
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Source: JLL Research
12.6%
9.3%
6.8%
6.0%
6.0%
5.8%
0.0%
Average vacancy, traded lab assets (%)
0.0%
Office vacancy (%)
28
20 TW
ALEXANDER
For more information, please contact:
Pam Michael
Bill Sandridge
Executive Vice President Managing Director
919.424.8173
919.424.8174
[email protected] [email protected]
5420 WADE PARK BLVD | RALEIGH, NC | www.jll.com/raleigh-durham