Earlier this week, GlobeSt.com reported that Unico sold its Washington Park office development fronting Interstate 405 north of Overlake Hospital to locally based Wallace Properties for $11.05 million. The 70,312-sf, two-building property is 96% leased to 11 tenants, the largest being Sunterra Resorts. It was built in 1979
Unico bought the properties in 1998 with a partner and planned to hold the buildings for a maximum of five years. "We just made it," Unico regional vice president Larry Klatt tells GlobeSt.com.
Klatt says both properties were brought to market two years ago but no deals were consummated. Unico instead worked hard to lease up vacant space and renegotiate and extend leases with tenants to make them more marketable.
"We contacted every tenant (in the Delphi Building) and the majority of them extended," says Klatt. "It had a lot of exposure in 2004 and 2005 and we were able to push that out to 2006, 2007 and beyond."
As for the $1 million more paid by Sunlife for a similar size building, Klatt says the Delphi has higher in-place rents, much greater visibility and a more central location. For Sunlife to capitalize the investment over 12.5 years, the triple-net rental rate at the fully-leased property would need to average about $14, which is close to the current average asking rate for class B suburban office properties in the I-90 corridor, according to the latest data from Grubb & Ellis.
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