Headquarters come and go - it's jobs that count

BY DAVID BRACKEN - Staff Writer

The Triangle: A great place to live and work; not so great for a corporate headquarters.

You'd never hear this region's boosters utter such a line, but it's hard not to at least think it after a week in which the Triangle received another economic pat on the back and downtown Raleigh lost another headquarters.

The accolade came from the Brookings Institution, a Washington think tank, which ranked the Triangle among the 20 strongest performing metro areas in the U.S. through the first quarter.

The lost headquarters, of course, is RBC Bank, which is being bought by Pittsburgh-based PNC Financial Group for $3.45 billion. News of the deal comes less than six months after Duke Energy announced it would acquire Raleigh-based Progress Energy and locate the merged company's headquarters in Charlotte.

The mergers are sure to result in job losses, and possibly reduced real estate footprints.

But there's an argument to be made that, both from a commercial real estate standpoint and an economic standpoint, the damage is mostly cosmetic.

"I don't think it matters as much as long as there are people here creating jobs," said Andrew Kelton, head of CB Richard Ellis' asset services group in Raleigh. "It hurts to lose the prestige of it, but this is just simple business."

It's still growing

As a tertiary market, the Triangle has never been home to a large number of corporate headquarters.

At the moment, the region has two Fortune 500 companies - the Pantry in Cary and the soon-to-depart Progress.

That hasn't hindered the Triangle's growth, as many large companies have flocked to the region to set up research-and-development and back-office operations. Boston-based Fidelity Investments, for example, has added hundreds of local employees during the past five years and now employs more than 2,200 here.

"We're seeing jobs being created; they're just not being created by Fortune 500 headquarters," Kelton said. "We have a lot of activity right now in the 2,000- to 5,000-square-foot range. That's a good sign for the economy. For us in real estate that fills the holes that usually sit empty."

Among the 100 largest metro areas in the U.S., the Raleigh-Cary market ranked No. 1 in employment growth from the fourth quarter of 2010 to the first quarter this year, according to the Brookings report.

The job creators

The Triangle benefits from being home to lots of small companies, as opposed to relying heavily on a few larger employers, said Jim Anthony, a Raleigh real estate investor.

"They are not the real job creators when you look at the numbers," he said. "I'd rather have job-creating companies than headquarters of companies that are stagnant or shrinking."

The most obvious downside to this region's dearth of corporate headquarters is that it makes revitalizing downtown areas that much harder.

Both Durham and Raleigh are trying to build up the density of workers and residents in their downtowns.

Each downtown has a number of proposed office projects that will require a large anchor tenant to get built. In Raleigh, there's Charter Square at the south end of Fayetteville Street and Edison across Blount Street from City Market.

In Durham, there's the Diamond View III office building planned for American Tobacco Campus and the old Woolworth's site, where Greenfire Development hopes to build a new office tower.

Sometimes a ploy

Few large tenants are trying to relocate, and many that are looking simply use the exercise as a way to extract more incentives from their hometowns.

"Getting a large corporate relocation is no picnic," Anthony said. "It's a very competitive marketplace and a lot of the companies that were going to (move) have already done so."

This explains the euphoria over Red Hat's decision to stick around.

The software firm started in Durham, moved to Raleigh and is now looking for 300,000 to 400,000 square feet in Wake County.

The lesson being, instead of trying to persuade a corporation to relocate, the Triangle is probably better off nurturing its own.

david.bracken@newsobserver.com or 919-829-4548