Newton's ruler; as construction soars, Tar Heel builders again scale the heights and fret about physics: "what goes up...." (construction projects in North Carolina)

• Author: Mayfield, Lisa Pritchard

As president of Fowler Jones Beers Construction Co., a general contractor in Winston-Salem, David Walters has seen the building industry go through its share of ups and downs. So pardon him if he's less than optimistic about the current upswing. "There was plenty of work in 1996," he says. "But my gut feeling tells me we're at the top of the cycle."

Construction is surging statewide, so most contractors and developers are loath to hint at overbuilding. But there is a relative glut of industrial space in Charlotte, and the commercial numbers are creeping up. Frank Warren, who keeps tabs on construction in that city for Karnes Research Co., says office vacancy was at 9.1% in January, up from 8.1% at the start of 1996. He expects it to hit 10% or 11% by midyear, given the current wave of development.

"There may be a few too many new projects coming out of the ground," he says.

But he's not too worried about those figures in a growing market. "We definitely had some pent-up demand, and we need to keep some vacant space on the market as a relief valve for expanding and relocating tenants."

That demand is a good reason to build, says Jim Palermo, a NationsBank executive vice president and head of the division that oversees its real estate. The bank's 201 North Tryon office tower in downtown Charlotte tops BUSINESS NORTH CAROLINA's list of the largest commercial projects in the state. Still, the bank took some convincing from the contract developer that initiated the project.

"We had other land we were considering developing, so we were hesitant about Trammell Crow's proposal," Palermo says. "We said, 'Yes. No. Yes. No' - and went back and forth on it for some time." But the bankers eventually bought in and were ready with a plan by mid-1995. He thinks they made the right choice since speculative office space in the tower is leasing quickly. "We're in a booming economy, so this space is coming on the market at the right time."

In the Triangle, low vacancy rates seem to justify new work. Karnes Research reports office vacancies of 7.2% and warehouse vacancies of 8.8% at the start of 1997. The Triangle is a slightly smaller market than Charlotte - 20.1 million square feet of office space, for instance, compared with 22.2 million - but it continues to be the strongest of the state's three urban areas. It absorbs around 700,000 square feet of office [TABULAR DATA OMITTED] space a year, roughly the same as Charlotte.

The Triad remains the weakest of the three. Triad vacancies were at 13.8% for office and 18.3% for industrial space at the year's start. Moderate growth there is sensible, according to Steve Ellis, senior vice president at developer Starmount Co. in Greensboro. Available land and lower cost, coupled with transportation problems in Charlotte and Raleigh, "makes the Triad more attractive-looking down the road," he writes in a report in February for the state chapter of the Commercial Investment Real Estate Institute. The area is also seeing spillover development from Charlotte and the Triangle.

BNC's top-10 project lists run the gamut. On the commercial side, there are three office buildings, including two towers, three hospital expansions, three institutional projects and a multiuse development. Five new factories, two expanded plants and three distribution centers make up the industrial list.

Though Phillips Place's shops put the multiuse development on the commercial list, retail projects are otherwise conspicuous by their absence. That's in stark contrast to BNC's last list, which had three malls. "There is some question as to whether the state's markets can support the extensive amount of retail construction that has occurred in recent years, so we're seeing a slowdown now," Warren explains. Charlotte has been particularly hard hit, with several anchor tenants closing in power centers such as Carolina Pavilion.

While the big commercial projects are clustered in the three urban centers, the industrial list blankets the state. Though only one project in western North Carolina made the list, several others came close.

To qualify, projects had to be under construction in 1996 or early 1997. Those that made lists in previous years were excluded, as were prisons and schools. The rankings are based on construction costs, not investments in machinery, and exclude residential portions of commercial projects.

Commercial

201 North Tryon office tower Charlotte

Only a stone's throw from its headquarters in downtown Charlotte, NationsBank Corp. is building a 30-story, 700,000-square-foot office tower. Ground was broken in April 1996 on the $116 million project, and construction is set to wrap up in November.

NationsBank will own the building and occupy half of it. Smith Helms Mulliss & Moore, a law firm whose old offices were...