PLANTATION, FL-In a move to shift capital from Midwest suburban office assets to quality properties in other parts of the US, Duke Realty has acquired the Royal Palm I and Royal Palm II Class A office buildings in Plantation. The seller was financial services firm TIAA-CREF. Financial terms of the deal were undisclosed.
With the acquisitions, Duke Realty expands its South Florida portfolio by 465,492 square feet to 1.9 million square feet in 13 buildings. Duke’s total portfolio of office, industrial, and retail properties in Broward County totals 2.4 million square feet.
“We look at these buildings as an opportunity,” Ed Mitchell, senior vice president of Duke Realty’s South Florida operations, tells GlobeSt.com. “Our portfolio is about 96% occupied in South Florida. We believe we can bring the occupancy in these buildings up to that level.”
Both Royal Palm I and Royal Palm II are located in the Southpointe Centre Office Park near I-595. Royal Palm I is a nine-story, 240,308-square-foot building that is nearly 88% occupied. Royal Palm II is an eight-story structure with 225,284 square feet and is more than 90% occupied.
That beats the Broward County office market norm. The vacancy rate in the second quarter settled at 19%, according to Cushman & Wakefield. Class A space has held its overall asking rental rate between $31 per square foot to $32 per square foot for the past two years.
“These are clearly Class A institutional grade office buildings in one of the premier suburban Broward County markets,” David Moret, executive vice president at CREC, tells GlobeSt.com. “There is very strong interest today in institutional quality class A assets. We are going to see another office building trade in downtown Ft. Lauderdale in the very near future—and that’s going to be a larger deal than even the Royal Palm deals.”
Duke Realty’s acquisition of the Plantation office buildings follows the recent addition of two industrial and two office properties to its South Florida portfolio. In June 2010, Duke Realty acquired two 112,688-square-foot industrial buildings in Pompano Beach.
In March 2010, Duke Realty acquired two Class A office buildings in Miramar totaling 222,600 square feet. These transactions represent the second time in 18 months that the class A properties exchanged ownership. In addition to these newly acquired properties, Duke Realty owns and manages four class A buildings in Sunrise totaling 478,173 square feet and four in Weston totaling 388,112 square feet.
Mitchell is bullish on the South Florida office market. “Once we get job growth, there will be no space available,” he says. “The market has stayed very well-leased. It doesn’t take much of an uptick in job growth to fill every building up.”
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