Approximately two years ago EOP took a look at where the company was in terms of geographic presence, Shobi Khan, senior vice president of investments, tells GlobeSt.com. As a result the company began to exit some markets, such as Dallas, Houston and Cleveland, and looked more toward areas where the demand was strong and there were high barriers to entry, he adds.
"One place that stood out where we did not have a presence was South Florida," Khan explains. "South Florida has great demand and space constraints." Approximately six months ago EOP began to look into, and get an understanding, of the market--comprised of Miami, Fort Lauderdale and West Palm Beach. EOP went into contract for 1200 Corporate Place in the beginning of the year, but because of some hurricane-damage issues, the deal closed in the past week, he adds.
Potential buyers are often overwhelmed when investigating the possibility of acquiring assets that have suffered hurricane damage; however, EOP was able to leverage its operational model, John Sullivan, vice president, tells GlobeSt.com. Specifically, 1200 Corporate Place sustained roof and window damage, he adds. "So buyers have to look at what affect that damage has on leasing and then price accordingly. We've had enough experience in markets that have been susceptible to hurricanes. We can manage the risk pretty effectively."
The four-story office building was built in 1984 and is currently 94.3% leased. The complex, according to EOP, comprises 5.3 acres and includes a 443-space parking structure. Jones Lang LaSalle will manage and lease the property. In 2007, the property is facing a total 20% rollover and Khan explains that 20% is typical with five-year leases. "It's a pretty stable asset."
The building was marketed by CB Richard Ellis team of Christian Lee and Charles Foschini.
Broadway Partners acquired 1200 Corporate Place in June 2004. David Peretz, vice president-acquisitions for Broadway Real Estate Partners, tells GlobeSt.com the company sold the property because it had fully accomplished the objectives it set for itself upon acquisition. "When Broadway acquired the property, there were no properties in the area profiled by the brokerage community as being between the class A properties that rented for $24 per sf and the class B properties that rented for $16," Peretz says. "Broadway believed there was a market for a building that profiled as an A-/B+ alternative for tenants that wanted something in between and would be willing to pay $18 to $20 per sf, and this particular building and location at the corner of Federal Highway and Glades Road was well suited to provide this alternative."
Since 2004, Broadway implemented a capital improvement program that included a lobby refurbishment--floors, wall coverings, lighting and interior landscaping--and an exterior refurbishment--entry area metal, signage, lighting, landscaping, fountain and lobby. According to Peretz, when Broadway acquired the property the asset was 84% leased, and the second largest tenant, an executive suite operator that accounted for 15% of the rentable square footage, was on the brink of defaulting on its lease. Broadway stabilized the building and increased occupancy to 94% at the time of sale.
Broadway currently owns three additional properties in the South Florida marketplace, 218, 231, and 324 Royal Palm Way in Palm Beach, located on "Banker's Row". Broadway is in the process of an extensive capital program involving those assets as well, and remains bullish on the overall South Florida market, as it continues to pursue opportunities from Palm Beach south to Miami, Peretz adds.
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