Legacy Union tower sells for a record-setting $441.6M

Highwoods Properties Inc. (NYSE: HIW), a real estate investment trust based in Raleigh, paid about $441.6 million total for the 33-story, 841,164-square-foot building at 620 S. Tryon St. That’s a slight increase from the previously reported price of $436 million, the amount Highwoods disclosed when it went under contract for the tower. Highwoods acquired Bank of America Tower from the building’s developer, Lincoln Harris, which is working on the Legacy Union project with Goldman Sachs.

The transaction sets a new record on a total sale price basis for a single office property in the state. Highwoods paid about $525 per square foot for Bank of America Tower. The per-square-foot record for office in Charlotte is currently held by 615 South College, which sold for about $590 per square foot last year.

But the record for office sale price may not hold for long. BB&T and SunTrust are expected to formally merge in early December to become Truist, which will be based in Charlotte. The bank has an option to purchase Hearst Tower — where it will keep its headquarters — for $455.5 million early next year.

Bank of America Tower is more than 90% leased, with Bank of America Corp. (NYSE: BAC) leasing about 600,000 square feet there. Other tenants include law firm Parker Poe, which leases 86,000 square feet, and KPMG, which has about 46,000 square feet. BofA also opened a retail branch on the building’s ground floor last month.

The acquisition includes 275 parking spaces as well as rights to about 2,500 parking spaces in the deck adjacent to the tower.

Highwoods plans to open a Charlotte office as part of its market entry. The company has owned commercial real estate in Charlotte but not since 2004 and it was mostly suburban properties, such as Parkway Plaza in the airport submarket and Mallard Creek Office Park in the university area. Earlier this year, a top executive at Charlotte development firm Crescent Communities, Brian Leary, left Crescent for Highwoods, where he now serves as executive vice president and chief operating officer.

Highwoods will be exiting Greensboro and Memphis, Tennessee, as it enters Charlotte, part of what the REIT called a “market rotation plan” when the Bank of America Tower deal was disclosed this summer. Ed Fritsch, former CEO of Highwoods, said at the time that Charlotte had been on the top of the company’s “market wish list” for a long time, referencing the city’s demographics, population growth and the ability for Highwoods to gain scale and market share here.

The 10-acre Legacy Union site includes two whole city blocks on the southern edge of uptown, near Bank of America Stadium and booming South End. Lincoln Harris is under construction on two additional office towers onsite, which will be anchored by Deloitte and Honeywell.