Wells Fargo vacates 29-story tower. What does that mean for Raleigh?
Wells Fargo announced Thursday it will abandon its 29-story iconic downtown Raleigh tower, relocating corporate employees to other locations across the area.
The banking giant said no employees will lose their jobs in the transition, but what does the move mean for downtown businesses?
The Wells Fargo Capitol Center rises over Fayetteville Street and has 550,538 square feet of office space.
WRAL News is working to learn how much of that space is occupied by Wells Fargo and how many employees are based there.
Jim Harris, CEO of Trademark Properties, told WRAL News there may be more office space vacancy in downtown Raleigh over the next 12 to 24 months as leases end.
"There are more leases that are still coming up from pre-pandemic, and many of us, and our friends in the industry, predict more vacancy," Harris said.
WRAL News also spoke to Visit Raleigh, which tracks sports conventions, leisure travel and meetings that bring people to the Triangle.
A major downtown employer like Wells Fargo moving jobs out of downtown Raleigh is a concern, but Lauren Gold, Visit Raleigh's executive vice president, explained it's not all doom and gloom.
"We are pacing ahead of last year‘s numbers, which is a strong sign," Gold said. "Hotel average rates are up, lodging tax collection is up, and those are big metrics that we look at."
Just under 100,000 hotel rooms are booked in 2024, and 242,000 people plan to attend conventions in the area. Those visitors and others are expected to spend a lot of money in the Triangle.
Currently, the total economic impact is forecast at nearly $90 million, which is 25% ahead of last year.
However, when companies move to other locations, it can have a lasting negative impact on small businesses in downtown Raleigh.
"Those jobs that are on site help fuel local retail and restaurants there along Fayetteville Street," Gold said. "That day-to-day residential for traffic does help propel those small businesses."
Why the big move? The banking giant said it has more real estate that it needs for the number of employees in the area.
Corporate real estate brokers told WRAL News they expect other companies to move out of downtown for suburban locations or office space in areas like North Hills.
One realtor told WRAL News the downtown area isn't as desirable as it once was for companies looking to expand.
Connel Fullenkamp, an economic professor at Duke University, agreed the move from the bank is not surprising.
"We're seeing a lot of consolidation of commercial real estate in general," Fullenkamp said.
Fullenkamp said companies like Wells Fargo are re-evaluating their use of real estate with cost-cutting as one of several other factors.
"We're going to see a lot of moves like that from companies frankly because they're finding themselves with too much space because of the overbuilding that's been taking place, plus remote work," Fullenkamp said.
Wells Fargo shared a statement about these changes, saying:
As part of our multiyear effort to build a stronger, more efficient Wells Fargo, we continually assess our real estate portfolio to ensure we are best meeting the needs of employees and customers, responding to consumer and economic trends, and managing our costs responsibly. We are committed to our Raleigh-based employees and will continue to have a major employee presence here, but we have more real estate than we need to support these employees. Employees currently assigned to our offices at Raleigh Capitol Center will be reassigned to existing, available workspace in other buildings.
Fullenkamp views the bank's relocation as a strategic maneuver to save jobs and escape expensive downtown rent.
The building was one of Raleigh's tallest when it was built in 1990, and, as First Union Center and Wachovia Center, has been a landmark for 30 years in the Raleigh skyline.
"They're probably saying we can make better use of this space by letting somebody else have it, who's willing to pay and utilize the space better," Fullenkamp said.
