(Read more on the multifamily market.)
RESTON, VA-Paramount Realty Group has sold out its latest Northern Virginia office condo conversion project located in Sunrise Oak Professional Park at 1801 Robert Fulton Dr. Joanne Harwood and Ken Traenkle, brokers with the Reston office of Randall Hagner Commercial, represented Paramount in the sales negotiations, which numbered 25 by the time the 87,000-sf, class A building was sold out.
Individual condominium offices range from 1,500 sf to 7,500 sf with the typical office condo taking up 3,000 sf. Tenants tended to be IT organizations that wished to be in the tech epicenter that is Reston, Traenkle tells GlobeSt.com. Condos traded from an average of $290 per sf and then tiered up to sales prices that were as high as $325 per sf.
The firm began marketing the building as office condos in March 2005, Traenkle reports. "By the time we stopped selling market dynamics had bumped the sf price up considerably." He says that one driver were the growing rental rates in Reston. "Firms saw that it would be a bargain to own a building here in the long run, as opposed to signing a lease," he says. The building also offers condo owners common public areas, including a two-story atrium lobby and on-level restroom facilities, as well as common operating systems.
Randall Hagner Commercial is also representing Paramount Realty Group in a 80,000-sf, class A office space in an adjacent condominium office building that is in the final process of site plan approval. Indeed the firm is very bullish on the office condo model, Traenkle reports. It realized a 10% to 20% premium in the office condo sales at 1801 Robert Fulton Dr., compared to what it would have gotten if the entire building had been on the market.
"The long term prognosis for office condo conversion looks well because the pricing for office buildings here has been fairly aggressive," he says. That means the buildings are usually purchased by large, institutional owners. Smaller sized companies, though, are equally as interested in owning their own office, especially in robust markets like Northern Virginia. "For them office condos are a viable alternative."
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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.
