offering memorandum 20 tw 20 tw alexander drive ... - … · 2 for more information, please...

OFFERING MEMORANDUM20 TW ALEXANDER DRIVE

20 TWALEXANDER

EXCLUSIVELY MARKETED BY:

FINAL

2

For more information, please contact:

Pam MichaelExecutive Vice President

[email protected]

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 The Property may be withdrawn without notice.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 clientsseeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.7 billion and gross revenueof $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 brandname, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.

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EXECUTIVE SUMMARY

PROPERTY PROFILE

LOCATION OVERVIEW

MARKET OVERVIEW

LAB INVESTMENT SALE ENVIRONMENT

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EXECUTIVE SUMMARY

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EXECUTIVE SUMMARY

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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.

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).

• 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

20 TW ALEXANDER

PROPERTY PROFILE

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PROPERTY DESCRIPTION

PROP

ERTY

PRO

FILE

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

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

ADJACENT 15.843 ACRE PARCEL

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PROP

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PRO

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ROOF

Construction:

Warranty: 10 years, August 31, 2008

Access: Internal stairway by employee entrance

UTILITIES

Water: City of Durham

Sewer: City of Durham

Electric: Duke Energy

Natural Gas: PSNC Energy

PLUMBING Back Flow preventer

ELECTRICAL

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

ADDITIONAL

• Sarnafil Roof• Installed in 1998

• Two (2) 4000 amp main service entrances• 1500KVA and 2000KVA Transformers (227/480V 3 Phase)

• Fitness Center• On-site cafeteria• Large training room• Well-appointed office and meeting spaces

• 6,356 SF Biology• 24,648 SF Analytical• 5,575 SF Chemistry

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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

OPERATING EXPENSES

2015 TAX VALUE

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

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20 TW ALEXANDER DRIVE163,171 square feet

Ground Floor

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First Floor

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Second Floor

LOCATION OVERVIEW

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HIGHWAY 55 AMENITIES

S MIAMI BLVD.AMENITIES

20 TW ALEXANDER

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HIGHWAY 55

DININGAladdin's EateryApplebee’sAzitra Authentic Indian FareBob EvansBrasa Brazilian SteakhouseBrizz Wood-Fired PizzaBruegger’s BagelsCaribou CoffeeCarolina Ale HouseChampa Thai & SushiChili’s Grill & BarCold Stone CreameryDairy Queen – Orange JuliusElevation BurgerFirewurstFlame KabobFujiSan Japanese SteakhouseGigi’s CupcakesGreek FiestaHayashi-Ya Japanese RestaurantHibachi 101Jason’s DeliJohnny Carino’s Country ItalianLime Fresh Mexican GrillLonghorn SteakhouseMaggie Moo’s Ice Cream & TreateryMcDonald’s Moe’s Southwest GrillNoodles & CompanyO’Charley’sPanera BreadRed Robin Gourmet BurgersSlice of NYStarbucks

AMENITIES

SubwayThe Rocky Mountain Chocolate FactoryWhich Wich?Wild Wind Cafe

SHOPPINGBarnes & NobleBest BuyBJ’s Wholesale ClubDicks Sporting GoodsGNCGoodwillHallmarkHomegoodsKay JewelersMattress WarehouseMen’s WarehouseMichael’sParty CityPetSmartPier 1 ImportsRoss Dress for LessRack Room ShoesStaplesTargetT.J. MaxxTotal Wine & MoreWalmart Supercenter

SERVICESAdvance TailorsBank of America

BB&TBlo Hair SalonBrier Creek CleanersBrier Creek Dental StudioEuropean Wax CenterEye Care AssociatesGreat ClipsMain Pedi Nail SpaMassage EnvyPlant Beach Tanning SpaSalon BluSkin Sense Day SpaSprintThe UPS StoreT-MobileVerizon Wireless

HOTELSEmbassy SuitesHampton Inn & Suites

SOUTH MIAMI BOULEVARD

DININGArby’sBojangles’Burger KingCilantro Mediterranean GrillFortune Asian BistroJake’s Wayback BurgersJimmy John’sMcDonald’sMez Contemporary MexicanPage Road GrillRandy’s PizzaStarbucksWendy’sWok ‘n Grill

SHOPPINGOffice DepotSam’s ClubWalmart Supercenter

SERVICESAtlantic Tire & ServiceBB&TBright HorizonsCoastal Federal Credit UnionFedEx OfficeFitness ConnectionGreat ClipsQD Nails & SpaState Employees Credit UnionVerizon Wireless

HOTELSCandlewood SuitesExtended Stay America

Holiday Inn Express & SuitesHomewood SuitesSheraton Hotel & Convention CenterSpringhill SuitesWingate by Wyndham

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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.

LOCATION OVERVIEW

MARKET OVERVIEW

Rent growthsince Q1 2014

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MARKET OVERVIEW

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Inventory Overall Vacancy Average asking rent

RTP / RDU SUBMARKET

Office 11,525,665 s.f. 2.4% 17.1% $20.78 Full Service

Flex 7,906,240 s.f. 3.6% 14.8% $11.97 NNN

Warehouse 13,806,847 s.f. 7.8% 5.7% $4.97 NNN

ALL SUBMARKETS

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

*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

RALEIGH-DURHAM SUBMARKETS1. North Durham2. Downtown Durham3. South Durham4. RTP / RDU5. Cary6. Southwest Wake

County

7. West Raleigh8. Downtown Raleigh9. Glenwood / Creedmoor10. Six Forks / Falls of Neuse11. Route 112. Eastern Raleigh

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2

3

4

5

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7 12

1110

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20 TW ALEXANDER

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MARKET OVERVIEW

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7% 7%15%

6% 5% 5%0%

5%

10%

15%

20%

US Average Indianapolis Raleigh San Diego Boston NYC

Employment Growth (2014 - 2019)

100 99 101108

117 120

80

90

100

110

120

130

US Average Indianapolis Raleigh San Diego Boston NYC

Wage Index

100 116

157 120

133 117

0 25 50 75 100 125 150 175

US AverageIndianapolis

RaleighSan Diego

BostonNYC

Educational Attainment: Bachelor’s Degree Index

500

1,000

1,500

2,000

2,500

3,000

$0

$100

$200

$300

$400

$500

$600

2010 2011 2012 2013

Jobs

Fund

s ($ M

illion

s)

International Company Investment

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MARKET OVERVIEW | RTP/RDU SUBMARKET

MARK

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Raleigh-DurhamLa

ndlor

d lev

erag

e Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

Non-CBD

RTP / RDU lab

Current conditions – market and submarket

1,600

5,500

1,300

1,148

2,00010,000

2,400

Map LegendBoundary of RTP proper

Influencing Office Park

Future Development Site

Major Employer Site

20 TW Alexander Drive

2015 Demographics(Radius search from 4117 Emperor)

3-MileRadius

5-MileRadius

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

% of College Educated Workforce 65.4% 64.3% 55.4%

Strong demand for lab and R&D space across the country has helped large life science companies power a disproportionate amount of office-market growth recently, with absorption occurring 2.9 TIMES FASTER IN RALEIGH-DURHAMthan the greater United States.

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MARKET OVERVIEW | LIFE SCIENCES

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RALEIGH-DURHAM MARKET OVERVIEWThe Raleigh-Durham life sciences cluster is familiarly called the Research Triangle Region due to the geographicnexus of the area’s three leading research institutions: Duke University, North Carolina State University and TheUniversity 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.

The Triangle’s rich talent pool, stable socioeconomic structure, proximity to universities and high quality of lifehas attracted some of the big names from the life sciences sector to the region. Agro-biotech firms havedisplayed strong growth in the past few years. The region is already home to four of the top five ag-techcompanies including Syngenta, Bayer CropScience, BASF and Monsanto.

A majority of the lab spaces tracked in the Triangle is owner-occupied and include manufacturing space devotedto pharmaceutical, biological or medical device & instrument manufacturing. There is a two-tier lab market withmodern lab facilities leasing in the $22.00 to $28.00 (NNN) per-square-foot range and dated lab facilities, roughly10 to 25 years in age, leasing in the $17.00 to $20.00 (NNN) per-square-foot range. The existing supply pipelineof quality lab space is fast diminishing, as there is a strong demand of technologically advanced space. Firmslooking to add additional lab space will most likely need to approach local developers to create a build-to-suitfacility. Given the current demand for lab space, opportunistic developers are redeveloping older assets to addwet lab space. The asking rents of some of these newer facilities range from the mid to high $30's (NNN) per-square-foot.

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 fundingenvironment has suffered a major setback. In the private sector, this has forced companies to look for creativesolutions to secure funding, specifically crowd funding. Over the past 12 months, multiple firms announced theirdecision to go public by filing for IPOs. Triangle firms have taken advantage of the improving stock marketconditions and have raised money via IPOs to support long-stalled projects. As the economy improves, investorsare 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 indirectlyconnected to this sector to grow in the region. We expect to see more mergers and acquisitions, which will likelylead to real estate consolidations. As a mature, established cluster, the Raleigh-Durham area has the necessaryinfrastructure in place to support the life sciences industry.

From a pure numbers standpoint, the region ranks behind other established clusters in science and engineeringgraduates and R&D capital as a percentage of state GDP. However, given the deep rooted presence of topindustry companies, a favorable living environment that attracts out-of-state professionals and amplepublic/private interest groups in the area, the market has more than enough resources to sustain the growingneeds of the industry.

RESEARCH TRIANGLE PARK

Facilities scorecardSupply Raleigh-DurhamRentable lab stock 9.9 M s.f.

Direct vacancy(Change year-over-year)

14.4%+2.5 %

# of large blocks over 100,000 s.f. 2

Under construction (s.f.) 0 s.f.

PricingAverage asking rent (NNN)(Change year-over-year)

$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 AMERICA6501 Six Forks RoadSix Forks / Falls of Neuse60,000 s.f.Class ARelocation

PATHEON4815 Emperor BlvdRTP / RDU30,865 s.f. Class BExpansion

701 W Main Street (The Chesterfield)Downtown Durham284,000 s.f. availableClass A*under renovation

ARGOS THERAPEUTICS1733 TW Alexander DriveRTP / RDU97,500 s.f.Class A*investing $57 million in new bio manufacturing plant

Leasing Under construction Large blocks of space

Activity key:

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MARKET OVERVIEW | LIFE SCIENCES

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Life sciences employment composition

Economic scorecardMajor lab supply:Clusters of established lab stock with long-time industry presence

Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing

Life sciences patents by classification

Workforce Total life sciences % life sciences to private employment GrowthEmployment 27,012 4.6% 1.2%Establishments 813 2.0% 5.2%

Funding 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 classesPatents 303 17.6%

Historical life sciences employment

Emerging lab supply:Areas with limited lab stock today that are poised for growth

34%

65%

1%Medical equipment & instruments

Pharmaceuticals & biotechnology

Crop science

28%

7%8%

7%

45%

5% Pharma & medicine manufacturing

Electromedical instrument manufacturing

Medical equipment & supplies manufacturing

Testing laboratories

Research & development

Medical & diagnostic laboratories

Life sciencesemployment:

27,012

non-labusing

labusing

3.6%3.8%4.0%4.2%4.4%4.6%4.8%5.0%

-

5,000

10,000

15,000

20,000

25,000

30,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Life sciences employment % life sciences vs. total private employment

Life sciences patents:

303

*includes data from 2013-2014

Orange County

East Raleigh

Route 1South

Durham

NorthDurham

DowntownDurham

Glenwood /Creedmoor

RTP/RDU

Cary DowntownRaleigh

6 ForksFalls of Neuse

85

440

40

WestRaleigh

20 TW ALEXANDER

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SALES COMPARABLES

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PROPERTY: 9000 Development Drive Morrisville, NC

SELLER: Synthon Pharmaceuticals

BUYER: Novozymes North America

RENTABLE SF: 30,500

PRICE: $5,100,000

PRICE PSF: $167

CLASS: B

DATE: December 2014

SUBMARKET: RTP / RDU

COMMENTS: Owner-user sale

9000 Development Drive

PROPERTY: 1035 Swabia Court Durham, NC

SELLER: Rubenstein Partners, L.P.

BUYER: Capital Square Holdings LLC

RENTABLE SF: 112,340

PRICE: $14,500,000

PRICE PSF: $129

CLASS: B

DATE: March 2014


COMMENTS: 100% leased to Reichhold at time of sale

Newcastle North

PROPERTY: 1101 Hamlin Road Durham, NC

SELLER: ICON International

BUYER: Easton & Associates

RENTABLE SF: 341,298 (5 properties)

PRICE: $16,250,000

PRICE PSF: $48

CLASS: B

DATE: August 2014

SUBMARKET: North Durham

COMMENTS: Portfolio consisting of industrial manufacturing

and office buildings

North Carolina Technical Park

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SALES COMPARABLES

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PROPERTY: 4222-4301 Emperor Blvd. Durham, NC

SELLER: Crown Realty & Development, Inc.

BUYER: Longfellow Real Estate Partners

RENTABLE SF: 188,191

PRICE: $23,616,556

PRICE PSF: $125

CLASS: B

DATE: February 2014


COMMENTS: ~76% leased at time of sale

Imperial Center R&D Portfolio

PROPERTY: 4611 University Drive Durham, NC

SELLER: GRA Durham Associates LTD LLC

BUYER: Blue Cross Blue Shield NC

RENTABLE SF: 100,000 (2 properties)

PRICE: $10,000,000

PRICE PSF: $100

CLASS: B

DATE: May 2013

SUBMARKET: South Durham

COMMENTS: Purchase for redevelopment

University Place IV

PROPERTY: 407 Davis Drive Morrisville, NC

SELLER: Guggenheim Real Estate LLC

BUYER: Alexandria Real Estate Equities, Inc.

RENTABLE SF: 81,956

PRICE: $19,445,000

PRICE PSF: $237

CLASS: A

DATE: September 2013


COMMENTS: ~100% leased at time of sale

Keystone Tech III

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LAB

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NT

LAB PROPERTY BUYER COMPOSITION (IN $), LAST 6 QUARTERS

56%33%

8% 2%1%

REITEquity FundCorporate/UserInstitutionalPrivate

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

AlexandriaRE Equities

SeniorHousingProps Tr

DivcoWest StarwoodCapitalGroup

LegacyPartners

HCP, Inc

Inves

tmen

t sale

volum

es (in

milli

ons o

f $)

LAB PROPERTY BUYER COMPOSITION (IN SF), LAST 6 QUARTERS

33%

24%

23%

12%

8%

REIT

Equity Fund

Corporate/User

Institutional

Private

0

200

400

600

800

1,000

1,200

DivcoWest Facebook PrincipalReal Estate

Investors

SeniorHousingProps Tr

HCP, Inc StarwoodCapitalGroup

Squa

re fe

et tra

nsac

ted (in

thou

sand

s)

Source: JLL Research

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LAB

INVE

STME

NT

PRICINGS PREMIUMS FOR ASSETS IN INVESTMENT SALES

INVESTORS PAYING PREMIUM FOR VACANCY IN HIGH GROWTH LAB MARKETS

Source: JLL Research

$0

$200

$400

$600

$800

$1,000

$1,200

Aver

age a

sset

prici

ng ($

p.s.f

.)

Office, Stabilized Lab, Stabilized

12.6%

9.3%

6.8% 6.0% 6.0% 5.8%

0.0% 0.0%0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%

Average vacancy, traded lab assets (%) Office vacancy (%)

5420 WADE PARK BLVD | RALEIGH, NC | www.jll.com/raleigh-durham

For more information, please contact:

Pam MichaelExecutive Vice President

[email protected]

20 TWALEXANDER

offering memorandum 20 tw 20 tw alexander drive ... - … · 2 for more information, please...

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