Despite an overall vacancy level of 15.6%, investors purchased five properties totaling 839,096 sf for an aggregate $99.3 million or $118.37 per sf. That per-sf price topped the 2003 mark of $104.37 per sf but didn't reach the average $121.89 per-sf price logged in 2002.
"Although most of the Orlando submarkets are experiencing double-digit vacancies, investors for the right property profile are pricing through the weak fundamentals of the market," says Ronald J. Rogg, CBRE's first vice president of office and industrial investment properties.
"Properties that have desirable characteristics, such as credit tenants, a stable rent roll, minimal tenant rollover and are not encumbered with debt fit the profile of today's most aggressive investors who are willing to pay more for these types of assets, while accepting lower yields," Rogg says.
A total 23 office properties totaling 1.4 million sf and valued at $146.3 million changed hands locally in 2003. In 2002, there were 20 sales totaling 3.1 million sf with an aggregate value of $380.6 million.
"This low-interest rate environment, coupled with unmet investor allocations from last year and lackluster stock market returns combined to fuel investor demand, which has allowed real estate to outperform other investment alternatives," Rogg says.
He adds, "the profile of the most active investors continues to be dominated by private capital. REITs continue to aggressively pursue office investments, followed by institutional investors who, along with all investors, are experiencing difficulty in locating desirable office building assets." Clearly, Rogg says, "for the time being, leverage is on the seller's side."
The five first-quarter sales included the 206,100-sf Maitland 200, built in 1982 at 2301 Maitland Center, Maitland, FL, and sold in January for $26.3 million or $127.61 per sf; the 221,830-sf Lakeview 436 building, constructed between 1975 and 1989 at 1035 Semoran Blvd., Winter Park, FL and sold in January for $21 million or $95.01 per sf; the 35,166-sf 1900 Building, built in 1973 at 1900 S. Harbor City, Melbourne, FL and sold in March for $3.35 million or $95.26 per sf; the 195,000-sf Hughes Supply Co. headquarters building, constructed in 2003 at 501 W. Church St, Downtown and sold in March for $23 million or $117.95 per sf; and the 60,000-sf FMU building, constructed this year at 9200 S. Park Center Loop in Orlando Central Park and sold in April for $12.6 million or $210 per sf.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
