This 12-story, 172,382 SF, historic Class A office building located in the heart of Uptown Charlotte, was constructed in 1924 and was extensively renovated in 1981. The Johnston Building was 83% occupied at the time of acquisition in February 2015. When originally constructed in 1924, the Johnston Building was the tallest building in Charlotte and was later designated a Historic Landmark.
This well-maintained core-plus asset was benefiting from significant capital investment executed by the previous owner which allowed Dilweg to purchase well below replacement cost. Projections showed investors a stable, appreciating cash flow with only modest near-term rollover or capital exposure. Dilweg added a tenant hub, renovated common areas and restrooms, and converted the first floor to ground level retail space.
“We believe the Johnston Building’s unique design, history, and central location make it attractive to the Uptown workforce.”
Drew Cunningham
President & General Counsel
Post recession, the Uptown submarket was slow to recover. Dilweg identified this strong purchasing opportunity to benefit from the upward trend of value in the submarket. The strategy was to increase NOI by restructuring and extending leases with existing and new tenants at competitive market rental rates and terms. Rents were approx. $2 PSF below market at the time of acquisition and the property was 17% vacant. The renovations executed by Dilweg increased the average in-place rental rates 5%, which along with market conditions, increased the valuation 30% in 4.5 years.