BB&T tower could rise at North Hills
Triangle Business Journal - by Amanda Jones Hoyle
RALEIGH - BB&T is exploring the possibility of building an office tower on a high-profile piece of property it owns near North Hills on Six Forks Road.
The Winston-Salem institution owns a 2-acre corner lot now occupied by a BB&T branch and a Bank of America branch at the corner of Six Forks Road and Rowan Street across from the North Hills fire station and adjacent to Carroll Middle School.
A BB&T official confirms that the company will not renew Bank of America's lease on the property. BofA's lease expires in March 2009, says BB&T spokeswoman A.C. McGraw.
"We're carefully reviewing our options for what makes the best business sense," McGraw says.
Each of the bank branch buildings was constructed in the 1960s, around the time the now-demolished North Hills Mall opened.
McGraw would not speculate about BB&T's plans for the property, but sources say BB&T executives want to build a multi-level office building in which it could consolidate many of its Triangle employees.
BB&T occupies several office buildings around the Triangle, including about 100,000 square feet in the BB&T/Two Hannover Square building in downtown Raleigh and space in the Highwoods Tower II building in Highwoods Office Park off Capital Boulevard.
Whether BB&T would relocate its workers out of downtown is seen as unlikely, at least for the foreseeable future. Frank Baird, who handles leasing for the BB&T/Two Hannover building, says the bank has a long-term lease that was renewed in 2007. At that time, BB&T took an additional 40,000 square feet in the building.
Still, North Hills has become a prestige address. First Citizens Bank has expanded its headquarters on property nearby and has signaled that it might expand that campus. Wachovia, North State Bank and RBC all have branches in the vicinity. CapTrust Financial Advisors will move its corporate headquarters to anchor the new 17-story CapTrust Tower office and retail building at North Hills East.
Kane Realty Co. President John Kane, who has no ownership in the BB&T property at North Hills, says he has heard about the possibility that BB&T could redevelop the site but has no direct information.
BB&T has the second largest market share among banks in the Raleigh-Cary metropolitan statistical area behind Wachovia.
BB&T had 33 offices and almost $2 billion in deposits, or 12.8 percent of the market share, as of June 30, 2007, according to the Federal Deposit Insurance Corp. Wachovia had a 30.8 percent market share.
Since 1996, BB&T has grown from $22 billion in assets to $136 billion, largely through acquisitions, says banking analyst Ross Demmerle, who tracks the company for Hilliard Lyons financial consultants of Louisville, Ky.
Demmerle says BB&T escaped most of the subprime residential lending debacle because subprime loans equal less than 1 percent of the company's total portfolio.
"What's putting pressure on asset quality is the residential, development and construction portfolio, which equaled 9.3 percent of total loans," he says.
Sterne Agee analyst Adam Barkstrom also is concerned that 44 percent of BB&T's portfolio is exposed to construction, commercial real estate and home equity lines of credit - "all areas of particular concern that continue to deteriorate in the Southeast."
Barkstrom owns stock in BB&T. Demmerle does not own stock in BB&T.
Reporter e-mail: aljones@bizjournals.com.
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