CLEVELAND—Buying, renting and developing properties in the nation's urban cores has become all the rage in the commercial real estate world, but some suburbs still provide exactly what many users need. Officials from Time Equities Inc. tell GlobeSt.com that is why they just purchased the “Rockside Office Portfolio,” a collection of six commercial buildings spread across three suburban office parks, totaling 422,037 square feet, for $20 million. Located in Independence, OH, a Cleveland submarket situated less than 15 miles from the city's center, the portfolio acquisition marks New York-based TEI's third purchase in the state, as the firm continues to expand its presence in the Midwest region.
“Rockside is fifteen minutes from downtown Cleveland and fifteen minutes from the airport,” says Jonathan Dulberg, senior associate in the acquisitions group of TEI, “and that is a happy medium that appeals to a vast array of clients.”
Jim Postweiler, managing director of office investment and sales with JLL's capital markets group, brokered the deal on behalf of the seller, Duke Realty. In-house counsel represented TEI while Angela Hsu, vice president of Duke, represented the seller. JLL will manage the property and CBRE will handle leasing.
As reported in GlobeSt.com, downtown Cleveland is undergoing a real renaissance, but Dulberg says it may not be the type of revival that benefits office users as much as those who want to live near the lakefront. “There are a lot of old, functionally obsolete buildings there, many with beautiful architecture and good bones, but they happen to lay out better for residential use.” Modern office tenants are “looking for bigger floor plates.”
The influx of residents into the CBD area has cut down on the stock of available office space, but Dulberg says company officials believe the Independence submarket is poised for solid growth. A roster of 29 tenants currently occupy 66% of the Rockside portfolio, but he expects that professional services providers, including insurance companies, lawyers, architects and financial services groups will begin to make inquiries, especially as TEI begins to renovate the buildings.
Buildings within this acquisition include:
• Rock Run North, a two-story, class B, 63,294 square-foot building located at 5700 Lombardo Center.
• Rock Run Center, a two-story, class B, 63,294 square-foot building also located at 5700 Lombardo Center
• Freedom Square I, a four-story, class B, 40,435 square-foot building located at 4401 Rockside Rd.
• Freedom Square II, a five-story, class B, 114,680 square-foot building located at 6000 Freedom Square Dr.
• Freedom Square III, a four-story, class A, 71,052 square-foot building located at 4511 Rockside Rd.
• Oak Tree Place, a five-story, class B, 69,318 square-foot building located at 6111 Oak Tree Blvd. that also includes an adjacent parcel of land with the as-of right ability to build a 137,000 square-foot office building.
“They are a little bit dated,” Dulberg says, but TEI will soon begin a capital program that will include renovations to the lobbies, common areas and amenity spaces across the portfolio. “By focusing on improving the areas that are critical to the tenant experience, we hope to set our portfolio apart from its direct competitive set in the market.”
“We know it will take time, but we are a long-term holder,” he adds. In fact, TEI is on the lookout for other properties in the metro area. “We view this as planting our flag in Cleveland.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
