The three-story steel-frame property was built in 1991 and sits on three acres at 3017 Douglas Blvd. The building is 100% leased and has no significant rollover for the next two years, according to local sources. Major tenants include Old Republic Title, Northwestern Mutual Life and Nutter Electric.

Brian Hanson, a Sacramento-based broker with Marcus & Millichap's Office and Industrial Properties Group, secured and represented the buyer in the transaction. Hanson tells GlobeSt.com that based on in-place rents the sale price gives the investment an 8% capitalization rate. Moreover, he says the in-place rents are about $1.80 per sf per month while the going market rate is closer to $2.20 per sf per month.

"This property represents an unusual opportunity to acquire a well-maintained mid-rise office building with long-term tenants in one of the area's strongest office submarkets," says Hanson. "As an investment it offers passive management, below-market replacement cost, stability of income and an excellent potential for future appreciation due to the location on Douglas Boulevard."In the first quarter of 2003, office vacancy in the Sacramento area increased 80 basis points to 13.3%, according to a new office forecast report by Marcus & Millichap Real Estate Investment Brokerage Company. By year's end, M&M is forecasting it will hit 14.7%. As a result, average effective rents, which were at $18.15 per sf at the end of the first quarter, should remain relatively unchanged through the end of the year, according to the report.