Offers Coming Due for West End Trophy

NASHVILLE-Locally based national real estate developer Alex Palmer & Co. is selling its namesake office building here, the 243,000-sf Palmer Plaza. The 18-story building, one of 16 class A office towers in the West End submarket, is 87% leased to 19 tenants. First round offers are due next week in the form of non-binding letters of intent.Jonathan Geanakos and Andrew Osborne of Trammell Crow Co.’s Investment Services unit in New York has the disposition assignment. There is no offering price, but the asset is expected to trade at a discount to replacement cost, which is estimated at about $190 per sf. At $180 per sf, the sale price would translate to about $43.7 million. Completed in 1986, the office building stands on approximately 1.5 acres at the corner of West End Avenue and 18th Avenue South. Its 13% vacancy compares to a submarket average of between 8% and 10% for class A buildings. Osborne tells GlobeSt.com that no tenant occupies more than 13% of the building and 53% of the leased space is filled with investment grade tenants, which compares to a submarket average of 31%. Some of those tenants include GMAC, Charles Schwab, Aetna, Bovis (Lend Lease), Actus (Lend Lease), MCI, Marsh & McLennan, Piper Jaffray and the US Veterans Administration. There is little lease rollover during the next two years, and between 25% and 30% in both 2007 and 2008, says Osborne. Expiring rents in the building are in the vicinity of $21 per sf, full service. A recent leasing transaction at Palmer Plaza saw Actus take the 17th, and a portion of the 16th floor, on a six-year lease at $23 per sf, though no information was provided on any concessions that may have lowered the net effective rate. There are no sublease tenants in the building, says Geanakos.Geanakos adds that Palmer Plaza is located in a nine-block area–near both the University of Tennessee and Vanderbuilt University–that is experiencing a renaissance. “We believe the combination of an attractive institutional quality asset in a strengthening location…and pricing at a discount to replacement cost [will] make this offering a highly sought after office investment transaction,” adds Osborne.