City Office REIT Enters Raleigh With $330M Buy

The newly constructed property is anchored by WeWork and Envestnet.

Tower Two at Bloc 83. Rendering courtesy of Heritage Properties

City Office REIT Inc. has closed on its first North Carolina property with the purchase of Bloc 83, a two-building, 494,000-square-foot office property in downtown Raleigh, N.C. Original developer Heritage Properties pocketed $330 million for the office complex.

First to come online in 2019, the $86 million 1 Glenwood Ave. comprises 227,500 square feet and was 93 percent leased at the time of the sale. The property is anchored by WeWork, which signed an 81,032-square-foot commitment for floors three through five in 2017, a deal that marked the shared office provider’s debut in Raleigh.

The 271,500-square-foot, $108 million second building at 621 Hillsborough St. opened in 2021. Also known as Tower Two, the property held a 67 percent occupancy rate upon its lease-up phase, with Envestnet as anchor tenant. M&T Bank backed the project with a $73.4 million construction loan. Rising 10 stories, the tower was designed by prestigious architecture studio Gensler.

The Class AA buildings are situated in the Glenwood South district and include street-level retail, a rooftop sky lounge, two fitness centers and a yoga studio.

Other City Office deals

The REIT had a busy end of 2021, as it closed on two other purchases in the last month of the year. The company picked up The Terraces, a 1.3 million square-foot mixed-use asset in Dallas, for $133.5 million. The LEED Gold certified property sold at $773 per square foot and was 99 percent leased at the time of sale.

Just a few days prior to the trade, the REIT paid $150 million for the 307,030-square-foot office component of Block 23 at CityScape in downtown Phoenix. The deal closed at $488.60 per square foot, a record price for the market in 2021. RED Development was the seller.

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