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Uptown Charlotte’s High-Rise Office Tower Set for Auction

The 32-story office tower in Uptown Charlotte, heading to auction on January 10, 2024.

News Summary

A 32-story office tower in Uptown Charlotte, located at 400 South Tryon, is headed to auction on January 10, 2024. The property, previously owned by Oaktree Capital Group, is facing foreclosure due to significant financial troubles. With an occupancy rate of just 23%, investors see this as a unique opportunity, albeit one with risks due to the building’s current condition and broader market challenges in office space demand.

Uptown Charlotte’s High-Rise Office Tower Heads to Auction

In the heart of **Uptown Charlotte**, a 32-story office tower located at 400 South Tryon is gearing up for a major change. This distressed property, with a sprawling **587,000 square feet** of office space, is set to be auctioned off to the highest bidder on **January 10, 2024**. Mark your calendars! The auction will kick off at **10:01 a.m.** sharp on the first floor of the **Mecklenburg County Courthouse** at **832 E. Fourth St**.

The Backstory

Why is this building, once a beacon of commercial activity, heading to auction? Well, it all boils down to financial troubles faced by the previous owners. In **July 2023**, Oaktree Capital Group defaulted on a hefty **$93.5 million loan** that resulted in the approval of foreclosure proceedings by the **Mecklenburg County Superior Court**. When Oaktree acquired the property in 2018, they shelled out **$133.5 million**, which came out to about **$227 per square foot**. However, the financial landscape shifted, and by November 4, 2023, Oaktree was staring down an unpaid amount exceeding **$90.7 million** in principal and interest.

What to Expect at the Auction

For those with a keen eye on investment opportunities, this property will be sold **“as is, where is”**. That means bidders need to be aware that they are taking on the building in its current condition. The auction is set for **10 days**, allowing for upset bids, so it’s a mystery how the final sales price will shake out. Interested bidders should come prepared, as the winning bidder might need to cough up an immediate cash deposit of up to **10%** of their total bid.

Current State of the Tower

As it stands, the office tower is experiencing a **staggering 23% occupancy rate**. Among the few tenants holding on are LaBella Associates and Olly Olly. This low occupancy is reflective of a broader trend affecting office spaces across the nation, especially as remote work becomes the norm. Charlotte itself saw its office **vacancy rate climb to 24.7%** in the second quarter of 2023, according to industry insights.

Impact on the Charlotte Market

These high vacancy rates are reminiscent of a puzzle with missing pieces. Reasons include an oversupply of office spaces and a slowdown in demand as companies shift towards flexible working conditions. In fact, there has been a **39% drop in new commercial projects** entering the development pipeline this year compared to 2022. This situation is driving many commercial property owners to reevaluate their portfolios and strategize on how best to manage these growing challenges.

The Management Change

In an effort to navigate through these turbulent waters, JLL’s Lewis Taulbee has been tapped as a limited receiver, tasked with managing the property and facilitating the foreclosure proceedings. Notably, Trinity Capital Advisors maintains a stake in the building from their **2014 acquisition** in collaboration with DRA Advisors. However, the situation shifted dramatically after the retirement of Gary Chesson, a founding partner at Trinity, back in December 2021.

As the auction day approaches, all eyes will be on Uptown Charlotte and what the future holds for this iconic tower. Will it attract the right investor willing to breathe new life into its halls, or will it continue to serve as a stark reminder of the challenges facing modern office spaces? Only time will tell!