Rarely in the world of commercial real estate does revitalizing an aging property make a big enough splash to reshape an entire market.
But Innovation Park is well on the way to doing exactly that inside University Research Park in northeast Charlotte. At 200 acres and 1.9 million square feet, “We thought it was large enough to be a game changer in the whole market,” said Chris Epstein of BECO South, which paid $41.6 million for the former IBM campus in 2010.
After the purchase, Innovation Park leased a head-turning 500,000 square feet within 19 months to tenants ranging from Classic Graphics (179,775 square feet) to AXA Equitable Life Insurance Co. (140,000 square feet). The first tenant, Classic Graphics, “was validation for us,” Epstein said, “but AXA (announced in March 2012) was the absolute validation.” That’s because the New York-based insurance giant was willing to share BECO’s vision, agreeing to move 26 miles north in May 2013 from a south Charlotte business park where it had operated since 1998.
Epstein said the partners in Rockville, Md.-based BECO Management, a specialist in rehabilitating distressed properties, were impressed enough to pay cash after visiting the property for the first time in December 2009.
They formed BECO South with Epstein at the helm to renovate buildings, add two decks to boost parking to 6,500 spaces, create tenant amenities and upgrade landscaping and signage. In the process, BECO took a different approach from previous owners of the 30-year-old IBM campus, naming it Innovation Park to embrace the computer icon’s innovative work and investing up front to attract tenants.
So far BECO is investing approximately $50 million in a first-phase renovation that includes a bistro, food carts, fitness center, nature lounges, conference rooms, electric charging stations, child care, bike sharing and dry cleaning delivery.
In announcing its move there, AXA cited Innovation Park’s “state-of-the-art work environment featuring a full range of attractive amenities for our employees.”
Says Mary Hopper, executive director of University City Partners: “Innovation Park has really kicked everything into high gear at University Research Park, which actually has experienced steady growth over the past four years.” Among the earlier pivotal arrivals were the SPEED motorsports network, green building refurbisher Environmental Way and the North American headquarters of Electrolux.
“Those of us with University City Partners have been lucky to have a front row seat to see this transformation take shape,” said Hopper, whose agency promotes and markets University Research Park. “From our offices in Innovation Park, we have witnessed a steady stream of potential tenants, watched the parking structures being built and observed workers enjoying an ever expanding list of amenities.”
As Innovation Park wrapped up its second year, Wells Fargo & Co. signed a lease for an entire wing, and three tenants seeking more than 100,000 square feet each were “circling,” said Mercedes Merritt, BECO’s director of leasing. She works with leasing and marketing partner Jones Lang LaSalle.
BECO expects employment in the park to grow from 3,500 to 5,000 by April 2013. It’s 80 percent leased, up from 35 percent when BECO arrived. As vacant space fills, Epstein wants to add build-to-suit projects inside the park and construct buildings around the perimeter.
The park could grow by an additional 1.5 million to 2 million square feet over a decade, pushing it to the 4 million-square-foot range, Epstein said.
Innovation Park is BECO’s first venture outside the metropolitan Washington, D.C. area, where it has operated for 26 years.