Red Hat won't build new HQ downtown; plans to sublease Progress building

Red Hat has signed a letter of intent to lease Two Progress Plaza, the 19-story building on Davie Street now occupied by Raleigh-based energy company.

Red Hat spokeswoman Leigh Day said the letter of intent is nonbinding and that no formal lease has been signed as of yet.

The Raleigh software firm plans to move all of its Raleigh workers, roughly 600 employees, into the building sometime in the future.

The timing of the move has not been determined, Day said.

Red Hat announced earlier this year that it would move to a new headquarters somewhere in Wake County. The company was also considering constructing a new building on several sites in downtown and around the country.

The pending merger of Duke Energy and Progress Energy made Two Progress Plaza a possibility.

The merger, which is expected to close by the end of this year, will lead to the elimination of hundreds of jobs at Progress and Duke. Progress CEO Bill Johnson said earlier this week that the the extent of the staff reductions will be finalized in late September.

Progress employs 1,050 in the Two Progress Plaza building on Wilmington and Davie Streets. In all, Progress employs about 1,900 people downtown, mostly in its two office towers.

All employees would clear out of the Two Progress Plaza building and the power company plans to consolidate in a single building, the Progress Energy Building, a block away on Fayettville St., said company spokesman Scott Sutton.

Progress employees are expected to start moving out this year and would conclude the move by December 2012.

Two Progress Plaza includes 366,000 square feet and was built in 2004. It is owned by J.P. Morgan Trust Co.

J.P. Morgan is leasing Two Progress Tower back to Progress under a deal signed in 2003. That lease doesn’t expire to 2035, and the lease agreement includes a clause stating that, in the event of a merger, the lease transfers to the new company, according to Wake County property records.