Marc DeLuca, senior vice president at ING Clarion, tells GlobeSt.com that CitiMortgage, a business unit of Citigroup, arranged a sale-leaseback as part of the transaction. The company signed a 10-year lease at $14.50 triple net, DeLuca says. CitiMortgage employees occupy the entire 210,471-sf, two-story building located at 5280 Corporate Dr. in the Westview Corporate Center. The building is a hub that handles mortgage lending and services in the southeast.
According to Steven Gichner, a Grubb & Ellis senior vice president who worked on the transaction, the rate CitiMortgage negotiated was slightly below market. "Typically the going rate is $16 per sf to $16.50 per sf triple net," he tells GlobeSt.com.
Both investors and tenants are becoming more interested in Frederick, Gichner and DeLuca say. Besides the organic tenant growth, firms from nearby, more expensive submarkets are looking at Frederick to move or expand, Gichner says. "This market is really starting to come into its own as a cheaper alternative to Montgomery County, with access to a solid tenant and employer base," Gichner says.
DeLuca says the buyer was looking for investment opportunities in the Greater DC area. It liked the fact that this asset is located in the southern part of Frederick, where most of the area's growth is occurring and where office inventory is relatively limited. "That was one reason why this building in particular was so attractive," he says. "It is much larger than other nearby offices."
To properly value the acquisition, DeLuca says the firm relied on comps both from the Frederick and Gaithersburg markets. Recent trades in these submarkets include Columbia Equity Trust's off-market acquisition of 101 Orchard Ridge Dr., a three-story, 102,400-sf office building in the Gathersburg for $26.7 million several weeks ago.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
