Duke Energy Center - 48 Story Office Tower in Charlotte

[monsoon]

..... They did so in Minneapolis and now have higher employment there than they did during the Norwest HQ days.

.....

It was Norwest that took over Wells Fargo, not the other way around. This is why the Minneapolis operations continued to grow because we are talking about Norwest Bank doing business under the more well known Wells Fargo name. Norwest is doing business as Wells Fargo in a similar fashion to First Union doing business as Wachovia. The only difference is that Norwest moved its corporate HQ to San Francisco to take advantage of its location, but little else went there, and a lot went the other way. When Norwest took over, the reductions came from the original Wells staff. Minneapolis is the effective banking HQ of Wells Fargo.

In my estimation, Wells (Norwest) saw the opportunity to make a grab for Wachovia given it's troubles. It's my opinion they only wanted two things from the Charlotte bank. The customers and branches, and Wachovia's financial assets and liabilities which became very valuable when the IRS changed its rules specifically for this merger. Without that second part Wells would not touch Wachovia as they had already walked away from several attempts to merge. It was the IRS ruling that made the difference.

So if you accept that summary of what happened, then this means that Wells does not want or need much of anything else from Wachovia beyond the operations directly related to the branch network. However there a caveat to this. What happens in Charlotte will depend on what Well's decides to do with Wachovia's banking platform. They could decide to move the entire bank to 1. Wachovia's platform, 2. operate the two independently, or 3. move everything to Well's current platform. Most likely 2 won't happen which would be the best news for Charlotte. If they decide to keep the Wachovia platform then a lot of Charlotte jobs will be still saved. If not, and they decide to merge Wachovia onto to the Wells platform, then there are going to be layoffs here at levels that have not been seen in decades.

[Miesian Corners]

^The 11.8 number is if Wachovia vacated all of its space. Uptown is still one of the healthiest office markets in the nation and is accessible to most anywhere in the county via public transit. According to Colliers Pinkard 3rd Q office report, uptown has the lowest vacancy rate of all Charlotte submarkets. Here's the breakdown:

Uptown 2.5%

Airport 17.8%

Cotswold 14.5%

Crownpoint 13.1%

East Charlotte 15.%

Highway 51 15%

Midtown / Randolph 7.3%

Midtown / South End 10.4%

Northeast / I-77 17.8%

Northwest 10.1%

Park Road 13.1%

Southpark 10%

University 11.3%

The report states that the acquisition of Wachovia could create as much as 600,000 square feet (about 1% of the total Charlotte office market) of vacated space by both the bank itself and third-party companies that do business with the bank. It goes on to say that if half of projected job cuts are uptown, it estimates the submarket's vacancy rate would rise by almost 2%.

[dubone]

Ok, so Norwest was the nominal survivor, but moved its HQ to San Francisco and clearly did not reduce legacy Wells operations to zero, in fact they did the opposite. There was significant overlap between the two unlike with Wachovia.

My point was that legacy Wachovia ops are not going to be brought down to zero, and that point was left uncontested, so then the 11.8% vacancy is far beyond what is likely.

[monsoon]

.....

My point was that legacy Wachovia ops are not going to be brought down to zero, and that point was left uncontested, so then the 11.8% vacancy is far beyond what is likely.

In terms of Charlotte's operations, there is a huge overlap between Wells and Wachovia.

However to your point on downtown office vacancy caused by Wachovia reductions. What is to stop Wells from moving everyone left in Charlotte to their Harris Blvd facility? It is supposed to be able to hold up to 15,000 people, most likely already contains the things they might want to keep, and it has to be cheaper to operate than downtown skyscrapers. First Union got this property at a cut rate price from IBM when they decided to start pulling out of CLT in the early 90s.

[atlrvr]

What is to stop Wells from moving everyone left in Charlotte to their Harris Blvd facility? It is supposed to be able to hold up to 15,000 people, most likely already contains the things they might want to keep, and it has to be cheaper to operate than downtown skyscrapers. First Union got this property at a cut rate price from IBM when they decided to start pulling out of CLT in the early 90s.

Nothing except the fact they probably realize they would lose the IB and Wealth Management and other top end functions as soon as the economy improves enough that those workers have other options. The moved their headquarters TO San Francisco, so they have shown a culture of locating near where they think they will attract high quality employment and a willingness to pay more in location.

[Minneapolitan]

Nothing except the fact they probably realize they would lose the IB and Wealth Management and other top end functions as soon as the economy improves enough that those workers have other options. The moved their headquarters TO San Francisco, so they have shown a culture of locating near where they think they will attract high quality employment and a willingness to pay more in location.

If they were worried about high quality employment, then the headquarters would have more than likely remained in Minneapolis. The headquarters moved from Minneapolis to San Francisco due to Well's name recognition out West, the fact that the combined bank had $54 billion of deposits in California compared to $13 billion in Minnesota, and Norwest's CEO becoming head of the combined bank.

[monsoon]

....The moved their headquarters TO San Francisco, so they have shown a culture of locating near where they think they will attract high quality employment and a willingness to pay more in location.

Indeed. Then why bother with these functions in downtown Charlotte, NC? What will remain in Charlotte would be fine for Harris Blvd. Call me crazy, but I am thinking people working in such things as wealth management in this economy might want to be looking at another profession.

[Norm2]

Realistically speaking, I do not foresee Wells Fargo pulling thousands of people out of their uptown offices and moving them to the building off Harris. Especially now since Wells Fargo is paying for the rest of the construction of a new office tower uptown. Lets discuss realistic options rather than wild far-flung fantasies. I am sure that Wells is taking over Wachovia's lease agreements. Wells could not pull out of uptown towers until the leases are up.

[monsoon]

Wells hasn't paid for anything on that tower as they only took control of Wachovia a few days ago. I am assuming they are considering it a liability and will plan write it off, so essentially it will be paid for by the US taxpayer. Remember, as I said above, Wells would not touch Wachovia until the IRS changed its rules for how it would allow Wells to write off losses caused by Wachovia. This tower, of course, can be considered just another bad loan on a building by a party that had no need for it and couldn't afford it. It's really no different from an individual who paid for a McMansion to be built they couldn't afford.

Interestingly enough, the congress has said the IRS does not have this authority and Barney Frank just this past Friday said they have a bill ready to go to Obama the day he takes office to retroactively slap a lot of new regulations on the banks, some of the punitive, that took these deals from the government. It's going to be interesting to see how that will turn out.

[U4ick]

Construction at the top progressing (1/11):

[coyotetrickster]

Wells hasn't paid for anything on that tower as they only took control of Wachovia a few days ago. I am assuming they are considering it a liability and will plan write it off, so essentially it will be paid for by the US taxpayer. Remember, as I said above, Wells would not touch Wachovia until the IRS changed its rules for how it would allow Wells to write off losses caused by Wachovia. This tower, of course, can be considered just another bad loan on a building by a party that had no need for it and couldn't afford it. It's really no different from an individual who paid for a McMansion to be built they couldn't afford.

Interestingly enough, the congress has said the IRS does not have this authority and Barney Frank just this past Friday said they have a bill ready to go to Obama the day he takes office to retroactively slap a lot of new regulations on the banks, some of the punitive, that took these deals from the government. It's going to be interesting to see how that will turn out.

Monsoon, you keep coming back to this IRS decision and retroactive legislation in your jeremiad against Wells' acquisition. http://caselaw.lp.findlaw.com/data/constit...dment05/13.html. Courts have found (see link) that retroactive legislation for tax purposes can be limited to only the most current tax year. Congress convenes for this tax year on Jan 20. Since the same tax interpretation is being used in other TARP acquisitions, including a few industrial deals later this year, Congress cannot legally apply retroactive takings under the 5th Amendment. Period. Frank has released the text of his proposed legislation yesterday. It applies the same prohibitions and restrictions required in the recent auto industry 'bridge loans' (aka bailouts), to wit: Restricted bonuses, exclusion from bonus pools on C-level executives, etc. Nothing particularly onerous in the long term.

Additionally, do you really think Speaker Pelosi will permit her committees to introduce any legislation that will harm her district's largest private employer? Let me sell you A clue. Two letter word meaning a negative response to a binary-answer question. First letter is "N."

[monsoon]

I will point out that Congress can do anything it wants in terms of passing laws. Only the President can refuse to sign it into law and then if that doesn't happen only the Supreme Ct. has right to deem the law unconstitutional and then only if a challenge is raised AND they agree to hear it. I am only passing on what a member of Congress, albeit a very powerful one, has said in terms of how they intend to deal with the banks once Bush is gone. For his part, and possibly a bit of good news depending on how it is interpreted, Obama said today that he does intend to stabilize the US financial system. What that means, I don't know, as he did not get into the details.

The only point of bringing it up was to point out that just because Wachovia continued to build this tower, is not an indication of future bank employment in Charlotte by Wells.

[coyotetrickster]

I will point out that Congress can do anything it wants in terms of passing laws. Only the President can refuse to sign it into law and then if that doesn't happen only the Supreme Ct. has right to deem the law unconstitutional and then only if a challenge is raised AND they agree to hear it. I am only passing on what a member of Congress, albeit a very powerful one, has said in terms of how they intend to deal with the banks once Bush is gone. For his part, and possibly a bit of good news depending on how it is interpreted, Obama said today that he does intend to stabilize the US financial system. What that means, I don't know, as he did not get into the details.

The only point of bringing it up was to point out that just because Wachovia continued to build this tower, is not an indication of future bank employment in Charlotte by Wells.

I will not disagree with you on that observation Monsoon. Congress can pass any law it wants (hello Terry Schiavo?). And you are very spot-on to not equate the Wells/Wachovia tower as an indication of future bank employment. Wells HQ (420 Montgomery) is a very discrete, 50s Moderne mid rise (dual entrances through it's California St. branch or the Wells Fargo Museum). It is a very lean HQ staff. You'll see a few C-Level executives in Charlotte. Lots of mid-level front-line managers and lots of branch support staff. There is a three hour time difference to staff. The majority of back office functions (Norwest ops) did continue to grow in Minneapolis, as it's a hell of alot cheaper for personnel-intense units to be housed where the cost of living/operations is cheaper (anyplace outside of SF actually). That means, in my opinion, lots of back office locations like the Harris Blvd faciltity you've referenced. Wells won't empty its old buildings. I have a friend who is a wells facility planner and they conduct ongoing real estate reviews based on head count projections (and actuals). That same rigor will be applied to Charlotte. I think you'll see several thousand jobs at the high-end eliminated in Charlotte.

[InitialD]

The mysterious 7th floor of the Mint museum. Ooooh, ahhhh.

[Commoner]

Wells hasn't paid for anything on that tower as they only took control of Wachovia a few days ago. I am assuming they are considering it a liability and will plan write it off, so essentially it will be paid for by the US taxpayer. Remember, as I said above, Wells would not touch Wachovia until the IRS changed its rules for how it would allow Wells to write off losses caused by Wachovia. This tower, of course, can be considered just another bad loan on a building by a party that had no need for it and couldn't afford it. It's really no different from an individual who paid for a McMansion to be built they couldn't afford.

The tower isn't considered a "bad loan" in any respect. It's nothing like an ill-advised McMansion for purposes of Wells Fargo's accounting treatment of the expenses incurred in respect of the building.

It's a primary obligation of Wells Fargo inasmuch as it was an obligation of Wachovia before comsummation. What, exactly, do they plan to "write-off"? What did Wells Fargo/Wachovia lend, and to which entity, for construction?

Please help us understand what you're talking about.

[Eastman]

The tower isn't considered a "bad loan" in any respect. It's nothing like an ill-advised McMansion for purposes of Wells Fargo's accounting treatment of the expenses incurred in respect of the building.

It's a primary obligation of Wells Fargo inasmuch as it was an obligation of Wachovia before comsummation. What, exactly, do they plan to "write-off"? What did Wells Fargo/Wachovia lend, and to which entity, for construction?

Please help us understand what you're talking about.

I don't know, but I swear I saw them jacking up the cranes over the condo site today. Why are they doing that if this is a no go? If some one has a better visual could you please confirm this.

[jednc]

I don't know, but I swear I saw them jacking up the cranes over the condo site today. Why are they doing that if this is a no go? If some one has a better visual could you please confirm this.

This isn't worth much, but...

I was walking down Church St. past the back of the Mint Museum week-before-last and there were several workers standing where 1st St. is closed. I decided to walk over and ask them what they knew about the condo tower. I asked them if it was going to be built or not. One said he'd heard yes, one said he heard it wasn't, and the third didn't respond. I didn't have time for any follow up questions because a load of cement arrived and they were busy directing the truck.

Basically...nothing to add.

[Eastman]

This isn't worth much, but...

I was walking down Church St. past the back of the Mint Museum week-before-last and there were several workers standing where 1st St. is closed. I decided to walk over and ask them what they knew about the condo tower. I asked them if it was going to be built or not. One said he'd heard yes, one said he heard it wasn't, and the third didn't respond. I didn't have time for any follow up questions because a load of cement arrived and they were busy directing the truck.

Basically...nothing to add.

They where not raising cranes, I was looking through the site to the Novare project, which actually was. On another note, I believe the Wachovia tower has been put on hold for maybe a month, I have not seen the cranes budge at all this week, but if anyone can confirm this I would like to know why just out of curiosity.

[AuLukey]

They where not raising cranes, I was looking through the site to the Novare project, which actually was. On another note, I believe the Wachovia tower has been put on hold for maybe a month, I have not seen the cranes budge at all this week, but if anyone can confirm this I would like to know why just out of curiosity.

I don't know what you are watching this from, but if you look at the Royal Court webcam you can see the cranes moving every day for the past week. It appears they have also added about two floors of glass in the past week as well.

[HopHead]

They where not raising cranes, I was looking through the site to the Novare project, which actually was. On another note, I believe the Wachovia tower has been put on hold for maybe a month, I have not seen the cranes budge at all this week, but if anyone can confirm this I would like to know why just out of curiosity.

It's not on hold. There was plenty of activity there just yesterday...

[nonillogical]

It's not on hold. There was plenty of activity there just yesterday...

yeah its going slower but i have noticed the steel inch up just a bit (mostly on the higher stadium side) and they're also making some progress on the ground-level finishing. i really like the marble they are using.

[28202]

Did they raise the western most crane again? It looks taller than it previously appeared.

[Commoner]

Does anybody know why the top of One Wachovia has not been lit since 2008 (or since the closing of the acquisition)?

[gman430]

Does anybody know why the top of One Wachovia has not been lit since 2008 (or since the closing of the acquisition)?

Probably either to save money or due to an electrical problem.

[AuLukey]

What would that have to do with anything? That tower isn't/wasn't owned by Wachovia to begin with. I miss when the tower was lit up green at night. I mean really, how much money do you think they'd be saving by turning these lights off?

And in response to the crane action lately. I don't think the either of the cranes have been raised although I feel it may be necessary for when they construct the handle, which can't be too far off now.