The Charlotte Observer from Charlotte, North Carolina • 29

1 BUSINESS '5B ZITht narlotit Observer Sunday May 9 1982 Too litich Space o' Recession Completion of New Buildings Leave Charlotte With Surplus Of Offices flice buildings later in the decade But for the moment they say the recession has put a damper on office markets not only in Charlotte but across the country as well i t' A -7 700'' 4:: 41: i 7 I 411: Vit el IT r4 IP 4 l4'4 1 0 l'' -3R vii 04 1 4 iv-- 4 'ii--' '4: L'I'k 7 i 0t0 a'''''s 8- --7- i A I 1 '''iletokli- 1t 44410 411 t't i li 4t' ::0:111 i '''-''4 1 t4 1 i i IL "Office vacancies now have climbed to their highest point in three years fueled by large amounts of new and rehabilitated space reaching completion during the first quarter" says a March 31 report by Coldwell Banker a national real estate firm that keeps tabs on office space in 22 cities including Charlotte By MS VAN HECKE Minor Boohoos Editor Merrill Lynch Pierce Fenner Smith Inc Is moving its Charlotte brokerage offices into Charlotte Plaza at 201 College St this weekend to become the first tenant in downtown's newest and most expensive structure But the occupancy of the $45 million-plus 27- story glass-walled tower will be subdued Charlotte Plaza whose nearly 700000 square feet make it Charlotte's second-largest office building behind NCNB Plaza is less than 20 leased A block and a half away only 15 of the space in the newly renovated One Tryon Center at 112 Tryon St has been leased The figure is only slightly higher 17 at the renovated Johnston Building at 212 Tryon St and many of the bright new suburban office buildings put up in the past year are in even worse shape Charlotte has gone from shortage to surplus in office buildings Suddenly there is a lot of space available and not enough people to fill it "There's just no one out there" said a rueful James Alexander whose Alexander-Gibson Co de veioped Hedgemore Plaza on Hedgemore Drive just off Park Road It's 5 occupied Developers almost unanimously point to the national economy as the culprit and say they aren't panicked by the glut Several are planning additional Observer Photo By STEVE PERILLE Workmen Rush Final Touches On Floor Of Charlotte Plaza Since Jan I when the Co Banker survey found only 1 of Charlotte's office space vacant the availability of an additional 950000 square feet in the Johnston Building One Tryon Center and Charlotte Plaza produced a 176 vacancy rate That moved Charlotte from having the second lowest vacancy rate behind only Denver to highest in the 22-city survey a notch above Atlanta with a 154 vacancy rate What's more another 500000 square feet will come on the market next year when the first office tower at Independence Center Tryon and Trade streets is completed "A lot of (prospective) tenants are on hold because of the recession" said Bill Little Little Construction Co chairman who developed Southern National Center on South College Street and renovated the Johnston Building on South Tryon "It just doesn't make sense to them to take on additional expense first tenants moving in this weekend First Union Plaza Southern National Center and the Wachovia Center all opened in the early to mid1970s producing a brief glut that evaporated within two years Alexander says another Alexander-Gibson project 77 Trade Park at 1-77 and Clanton Road is 100 full except for a new building just being completed and there's only one prospect in sight for that "It's a funny feeling" Alexander said "like going to a See OFFICE Page 8B Cot 1 right now" But Little says the recession is not the only explanation "Charlotte's pattern has been lots of space and no space lots of space and no space all the way back to the 1950s" Little said In an earlier generation of office buildings he iecalled First Union National Bank on South Tryon In 1955 was followed quickly by the Commerce Center on West Trade in 1958 Then City National Center and the Barclays American Building both on South Tryon were erected in 1961 NCNB Plaza i Nonunion Labor Boosts Builders ulders i What Bruton Smith' Up To With Republic PCA Deals? 0 By DICK MILEY vartner have bought 75 of the on the transaction salciin a sepa By DICK STILLEY partner have bought 75 of the on the transaction said in a ''''''4 411:4: -A v- I ri 5AiA 14'p'- '44A-0 I''''''' 4' Staff Writer Bruton Smith mho made his name in auto dealing and car racing has given Charlotte's business community fodder for a red-hot guessing game Brokers stockholders and just plain onlookers are wondering where he is headed with PCA International Inc Some observers figure he has set up a get-in take-a-profit and get-out position They think the key is PCA management's plan to buy back up to 300000 shares of Its stock a proposal stockholders will vote on at a meeting Monday 1 Other onlookers think he is for control of the Matthews-based photography company And a few believe there may be other big players in the game who haven't yet surfaced Smith started accumulating his PCA holdings March 25 just two days after selling out for nearly $400000 the largest shareholder in Charlotte's Republic Bank Trust Co He netted a profit of almost $190000 on Republic stock sale according to figures gathered from a number of sources including Smith himself many also has subsidiaries that employ union or nonunion work ers) "Virtually every large contractor has or is looking for 'merit shop' capability" said Hugh Rice vice president of Fails Management Institute a consultant to the construction industry "I see noth- ing but an ever-increasing move toward merit shops If you are a I's merit shop and large you have a very marketable commodity" What the construction industry ri means by a "merit shop" in the Industry is a system under which tit the contractor sublets jobs to 'f electricians and plumbers for example to the lowest qualified bidder regardless of whether that bidder is unionized While salaries for craftsmen unionized or not will generally be comparable union wages for unskilled work- ers are higher The shift to this low-bid system in construction began in the 1970s in when clients found that strikes by 'it unionized employees sometimes caused the price of a project to rise dramatically As union wages )17 rose some clients turned away At from union contractors "There was a period when a lot of workers abused the system and utilities and others broke away" said a spokesman for the '1 Building and Construction Trades Department of the American Fed- --14 eration of Labor and Congress of Industrial Organizations who asked not to be identified He '14' maintained however that in recent years the unions had taken See BIG Page 7B Col 1 11 By LYDIA CHAVEZ Now York limos GREENVILLE SC Construction executives in the South like to boast that the 100-mile stretch of pine-covered country side between here and Charlotte probably has more builders per square mile than any place in the United States Builders here have thrived on the Sun Belt's boom during the past two decades And lately this expansion has continued for quite a different reason: The companies are not bound by union contracts to hire union craftsmen Many clients believe that nonunion builders can offer better prices so while the rest of the construction industry flounders in deep recession Southern companies are entrenched and healthy Construction industry giants such as the Fluor Corp and the Bechtel Group which have traditionally been unionized have been acquiring building concerns or setting up subsidiaries that are not unionized Two of the largest companies in Greenville Daniel International and Yeargin Construction were acquired in the late 19701 Fluor paid $230 million for Daniel which analysts thought was high at the time They have changed their minds Last year Daniel's profits jumped 21 to $54 million Yeargin was acquired by the Perini Corp of Framingham Mass (IA Jones Construction Co of Charlotte now a part of Pilipp Holzmann AG of Frankfurt Ger sepastock in PCA which is the world's rate interview he had largest producer of retail color lated the Republic stock over the portraits past few year at an average purAnd according to a document chase price of about $20 a share filed April 30 with the Securities Two days after selling his Re-and Exchange Commission Smith public holdings Smith made his owner of Town Country first purchase of PCA stock Ford and principal stockholder of 000 shares through Charlotte Mo- Charlotte Motor Speedway al- tor Speedway and 17300 shares ready has made Just under $106- through Provident American In- 000 in his PCA dealings surance Co of Dallas Texas In that SEC document Smith which indirectly is controlled by and his partner Eastbourne NV Smith In both transactions the a Netherlands Antilles firm said price was $425 a share they own just over 268000 shares From then through April 26 of PCA while PCA's stock price was risThey also said they intend to ing Smith either directly or pursue one of two possible through the insurance company courses of action: seeking control the speedway or trusts of his chilof the company through a tender dren continued buying offer or election of directors or Meanwhile on April 20 selling their shares to one or more Eastbourne agreed to buy 102300 purchasers not excluding the shares of PCA from Smith at the company then-market price of $575 a The latter option was the share This sale was made by course Smith followed with his Provident American on April 28 Republic Bank stock On March and involved all the shares the in- 23 according to Republic's first- surance firm had bought to that quarter report to shareholders point "certain directors of the bank and At prices ranging from $425 a a third person not 'affiliated with share in late March to $5125 a the bank" bought Smith's 10212 share on April 1 the stock had shares for $3850 a share At that cost Provident American time bid price for Republic stock $482250 Though other options in traded over the counter was $32 the agreement might alter the fia share nal figures Smith's company grossed $588225 on the sale to In an interview last week Re- Eastbourne giving the firm its public Bank President John Sted- quick $106000 profit man said the premium was neces- The timing of the Republic sale sary to get Smith to agree to sell and the first PCA purchase sugSmithovho grossed $393162 gests to some observers that Brtiton Smith stock maneuvering Smith bankrolled his PCA venture with the proceeds from his Republic stock But In the interview Smith said he did not need to sell the Republic stock before he began buying PCA shares and indicated the timing was coincidental "If you are going to invest if you see something and that's the time to Invest you just go" he said The timing of Smith's sale of Republic stock seven days after the bank's annual shareholders meeting suggests something else Though neither Smith nor Republic president Stedman will confirm it at least a few Republic shareholders and some analysts believe Smith and Republic's management had struck A deal whereby Smith agreed not to involve himself in Republic's operations in return for Republic's offer to buy him out at a premium Stedman acknowledged Smith had discussed the possibility of so See WHAT'S Page 6B Col 1 And though Smith says the Republic sale was not a prerequisite to his PCA venture the sequence of events in the Republic transaction might provide some insight for those trying to predict what he intends to do with PCA So far Smith and a European 'Other TDCs' Likely To Stir Fuss of Repwilt: gdid6 Business Beat 4 'A Van Hecke StiV a HIGH INTEREST SHORT TERM' LOW MINIMUM At Northwestern Bank we make short-term high interest savings simple With our new 91-Day Certificate of Deposit you'll earn the highest interest rates the law will allow us to pay without tying up your money for a long time To earn the rate shown simply deposit a minimum of $7500 then sit back and watch your money grow The 91-Day Certificate of Deposit is the safe simple way I for you to earn a high interest rate on short-term deposits For more information on our new 91-Day Certificate of Deposit contact your local Northwestern Banker 4 1 's4 N' 'kr-n1 S110kj' 7 After all you're why we're here for you to earn a tugti interest For more irifor Certificate of 77 Northwestern Bank Member DIC Ibu're nig we)v here' pin lusil i The big residential-commercial complex proposed for Providence Road and NC 51 coming at the same time as the City of Charlotte's efforts to annex the lush Raintree and Providence Plantation neighbor hoods is sure to be In the news for weeks to come That corner already had been Identified by the Charlotte-Mecklenburg Planning Commission staff as a logical spot to develop a large mixed-use complex under a new zoning classification being studied here The planners call them urban development centers UDCs Four other potential UDCs have been Identified and at least one of them could be as controversial as the Providence Road project Planning Director Martin Cramton said the other UDC dots on the planners maps as: The proposed University City complex near UNCC and University Research Park The Eastland Mall area in east Charlotte 1-77 and Arrowood Road south of the city And SouthPark Charlotte's other big mall That's the one that might arouse a lot of emotion In fact sources in local government say two Charlotte developers apparently are well along in planning a big hotel-office-commercial venture there Considering the zoning fight that preceded approval of the rather demure Specialty Shops of the Park across Morrison Boulevard from the mall a move to build a new complex larger than SouthPark itself might set off some real sparks Early Lesson Nearly 10 years ago The Observer began to shift from typewriters to computer devices we call CRTs (cathode ray tubes) I used to suggest to newsroom visitors that their grandchildren would have these marvelous gizmos at home and school and might never learn to write by hand This almost always was greeted with polite looks of disbelief if not open derision and I now concede I was wrong I should have said children not grandchildren Shuford Smith a Charlotte educator recently formed Compute! The Academy for Computer Education at 4425 Randolph Rd at Cotswold He and his wife Mary Helen Smith operated the Coffee Grinder shop in the Overstreet Mall until they sold it earlier this year At Compute! Smith puts on classes for children an hour a week for 10 weeks or during summer "camp" sessions three hours a day for five days' with a goal of teaching "basic computer literacy" The youngest pupils? A mere 7 years old and Smith says they eat it up The age groups range all the way up to 16 He also does seminars for adults made up of two two-hour sessions designed to help them in selecting a personal or business computer But the youngsters Smith says seem to take to personal computers naturally whereas I've noticed an element of fear among many older adults when first exposed to the devices One thing's for sure at least In our newsroom Once they've learned how to use the computer no matter idle their age they never want to go back to the typewriter again In The News The Greater Charlotte Chamber of Commerce's annual inter-city visit will be to Denver The crowd of business and civic leaders chamber expects about 60 to make the $750 June 16-18 trip inspect Denver's transit mall still under construction a regional transportation system a convention and visitors bureau supported by a occupancy tax which Charlotte tourism boosters want badly an inner-city restoration project and a rapidly expanding central business district American Automobile Association has given Charlotte's Radisson Plaza its "four-star" rating because it exceeded the association's requirements in "hospitality room cleanliness decor and overall excellence" Winton "Red" Blount of Montgomery Ala who launched a construction business in 1949 when he and his brother paid $28000 for four surplus Army earthmovers says his Blount Inc exceeded $700 million in annual sales and should reach $1 billion soon Blount Inc did the Superdome the space shuttle launch pad and through a subsidiary most of the IBM complex in Charlotte If IBM keeps up its growth pace here the plant is 14 million square feet and still growing it should help Blount reach that $1 billion a year goal 0 einnt Northwestern Bonk Iractemate aposseloon poretitng ri 'i 4 IP VV '''''''r 4 t'''': A' '--1k i NLtr 1': 4: i 1 ''''-'fe ittl 0 441iW '''k '1: s' sk 1 A it A '''''f'0 s''''t i 'k''''k Ni 1 i 1 Isil I 1' i 1111 i 11 11k No4 1)14 11 VII i it'll 1 ''1'' 1 11)1 11111 Vi' I :1 1 4 It'fAx i111ii WI) i 't 1:11 li i 1121itoli i si: 4t4 3 I 1 11 1 1 i H' 1 IiiiQ1 i 0 i 01110 1 l'' 1 1 i I i 4 y(r ''0ti 11 'i :111 'i' -0 It i I il )) 1 A-----4 i ti 1 -q 11 04 kn' 'sill li :44 '-----0: -1 i rt' Federal Regulations require a substantial penalty for early withdrawal Regulations prohibit compounding or averaging of interest 14 91-DAY CERTIFICATE RATE 12425 Annual Interest Rate I Effective through: May 10 1982.