CORAL SPRINGS, FL-The Towers of Coral Springs, two six- and four-story glass office towers spanning 75,344 square feet, sold for $9.7 million. The asset was in foreclosure.
Marc Strauss, vice president of Investments in the Fort Lauderdale office of Marcus & Millichap, along with senior associate Al Palacios of the Miami office, listed the deal on behalf of the seller, a partnership and the original developer of the property. Andy Neiswenter, senior associate of the Miami office of Marcus & Millichap, represented the buyer, Hallandale Beach-based Beacon Realty Investments.
“Even though this building went into foreclosure, it was producing income,” Strauss tells GlobeSt.com. “A lot of buyers wanted the building for the loan value, but the seller wasn’t willing to let go on those terms. It took us almost 18 months to close this deal as we maneuvered bankruptcy procedures.”
The Towers of Coral Springs LLC was unable to obtain new financing for the property, which is located at located at 2855 N. University Drive. Beacon Realty Investments secured a loan to get the deal done. Towers of Coral Springs was 72% occupied at the time the sale, with national tenants including Morgan Stanley, First United Bank and medical office tenants.
Marty Busekrus, senior investment sales associate at NAI – Rauch Weaver Norfleet Kurtz & Co., tells GlobeSt.com that Towers of Coral Springs was a deal “with a lot of hair on it.” The building was on and off the market for about two years before it found a willing buyer and financing.
“There is a lot of competing product in Coral Springs,” Busekrus says. “We weren’t comfortable with the risk in this building. This was a tough deal to underwrite and I’m surprised the seller got that high of a price. There was an office building on Glades Road in Boca Raton that just traded for $90 a square foot. Granted it was only 40% full, but Coral Springs is a market with a lot of vacant space and declining rent.”
As Neiswenter sees it, the Towers of Coral Springs’ income stream combined with the opportunity to create value through property improvements was a winning combination for Beacon. Neiswenter says, “The buyer has plans to immediately begin renovations of the building and has already received significant interest from several potential tenants.”
But Busekrus is skeptical. Although Towers at Coral Springs is one of the most recognizable buildings in the area, there are trophy buildings with plenty of vacant space. In fact, the Exchange Tower, widely known as the “Darth Vader” building because of its all-black appearance, is next to the Towers at Coral Springs and has significant vacancy.
“I just don’t know why tenants would stay in the Towers of Coral Springs with so many other local options,” Busekrus says. “The buyer has their work cut out for them if they want those tenants to stay. Coral Springs is a really tough submarket.”
Beacon was not immediately available for comment.
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