Kane Realty adds office tenants at Smoky Hollow in Raleigh

As vacancy rates for office space remain relatively high in Downtown Raleigh, a new development has landed a collection of tenants.

A sizable chunk of office space in Kane Realty's Smoky Hollow has been claimed by five companies. The new leases total around 30,000 square feet combined in the 421 N. Harrington office building, which features 225,000 rentable square feet.

The new tenants are Scalene Design, Slalom Consulting, 2ndF, Brown and Caldwell and BHDP. The companies will occupy space on the third, fourth and fifth floors of 421 N. Harrington. The building's lease rates were last listed for $41 per square foot. When asked, Kane Realty didn't provide updated rates.

The future of office space remains undefined as the rise of remote work as forced companies and developers to reimagine how work is done and how office space is used. The impact is obvious in downtown Raleigh, where no new office towers broke ground in 2022. The vacancy rate in Downtown Raleigh for Class A office space was 11.42 percent in the fourth quarter of 2022, according to Triangle Business Journal Space data. In the fourth quarter of 2019, it was 4 percent.

At Smoky Hollow, 421 N. Harrington opened in second quarter 2021 with 8 percent occupancy. By the end of that year, occupancy was at 24 percent.

As vacancies remain high, Raleigh office space faces a changing future

Smoky Hollow is a mixed-use development with two phases completed and one on the way. The project is a partnership between Kane Realty, Williams Realty & Building Company and Lionstone Investments. When complete, the development will have more than 850,000 square feet of office space, 150,000 square feet of retail and over 1,000 apartments.

To date, Kane says that 98,417 square feet of office space has been leased along with 24,846 square feet of retail, not including the 45,600-square-foot Publix grocery store that's part of the development.

Scalene Design, a Raleigh-based structural engineering consulting firm, has signed a lease for 4,429 square feet of space. The company was previously renting about 2,000 square feet of space in the Two Hanover Square (Truist) building downtown.

"We are thrilled about the opportunity to relocate our office to Smoky Hollow. The building, its location, and the amenities in and around the building are outstanding and will be valuable to our ability to recruit and to provide an excellent work environment for our team," Robert Macia, managing partner for Scalene Design, said in a press release.

Get daily updates from Triangle Business Journal in your inbox. Sign up for our newsletters.

Slalom, a Seattle-based business and technology consulting firm, will occupy a 7,847-square-foot space. The firm operates globally, with a presence in six countries and 43 markets and over 13,000 team members. The company's website lists its current Raleigh office in Bloc83's One Glenwood.

"The Triangle is one of the fastest-growing global business hubs, where innovation abounds across technology, life sciences, manufacturing and more. That growth combined with the region's tremendous talent pool form the foundation for a thriving Slalom market," said Todd Christy, general manager of Slalom's Raleigh office.

As previously reported by the Triangle Business Journal, entrepreneur Bill Spruill is leasing office space in Smoky Hollow for his new foundation startup, 2ndF, which will take up 7,061 square feet.

Spruill was recently named Triangle Business Journal's 2022 Business Person of the Year. 2ndF focuses on deploying capital into the Triangle's technology scene. Spruill is also planning to allow some startups, like Raleigh-based Offline, to work out of the Smoky Hollow space.

Brown and Caldwell, an environmental engineering and construction services firm, is leasing 5,958 square feet of space. The California-based firm lists their current Raleigh office as the address for the coworking space (SPACE) inside Kane Realty's The Dillon in the Warehouse District. The company has over 1,900 employees across 52 offices.

BHDP, an Ohio-based international design firm, has signed on for 4,400 square feet of space. The company primarily focuses on workplace, higher education, industrial, discovery & science, retail and Healthcare work. The firm currently has an office in the Wells Fargo tower in Downtown Raleigh.

Scalene Design was represented in the deal by Casey McCullough with JLL (NYSE: JLL); Slalom Consulting was represented by Doug Brock and Issac Brown with NGKF; 2ndF was represented by Lewis Sloan with Davis Moore; BHDP was represented by Josh Stanley with the CBRE | Raleigh (NYSE: CBRE); and Brown and Caldwell was represented by Cole Gonet and Hayden Rasmussen with Savills.