Highwoods to Acquire Raleigh Office Tower

Highwoods Properties Inc. has agreed to acquire Advance Auto Parts Tower, a 20-story, Class A+ office asset in Raleigh, N.C. The Triangle Business Journal identified the owner as Lionstone Investments, which developed the building in partnership with Kane Realty Corp., the property’s manager.

Highwoods plans to fund the acquisition of Advance Auto Parts Tower “on roughly a leverage-neutral basis” using proceeds from the recent $145 million sale of three office buildings in Tampa, Fla.

Subject to customary closing conditions, the deal is scheduled to close in the next 30 days. The buyer will be depositing $20 million in earnest money.

A Highwoods spokesperson declined to provide additional information on the pending transaction.

A Class A+ office building

The 346,000-square-foot, LEED Gold–certified tower came online in 2020. It features 11 floors of office space atop eight levels of parking, as well as roughly 8,200 square feet of retail. The property was fully leased at the end of 2024, with a weighted average lease term of 8.2 years.

Advance Auto Parts Tower is in the North Hills submarket, with a street address of 4200 Six Forks Road or 4000 Front at North Hills Street. The building is immediately adjacent to CAPTRUST Tower, a 300,000-square-foot Class A+ office property that is also owned by Highwoods.

At the end of 2024, the REIT’s portfolio encompassed 27.2 million square feet across several U.S. markets, while its development pipeline totaled 1.6 million square feet. One of the underway projects is a 642,000-square-foot mixed-use development in Uptown Dallas that centers on a 26-story office tower.

Still recovering

The Raleigh-Durham office market seems to be largely in recovery mode right now, based on a fourth-quarter report from Avison Young.

For example, the Six Forks Road submarket has 1 million square feet of total availability, against an inventory of 4.8 million square feet. This is at least better than the ratio for the two metros overall, which is 14 million square feet available, compared with an inventory of 59 million.

A remarkable twist is that Class C space is seeing the lowest availability of all product classes, at 5.4 percent.

Still, Avison Young reports, trophy properties remain in a class by themselves: “Trophy property rates continue to be significantly higher than Class A space. Despite availability for trophy properties being high, at 44.5 percent, asking rental rates are unlikely to come down in 2025 as owners are still hoping to make their office investments work.”