KBS, Prime US REIT Buys Boca Raton Office Tower for $99.5 million

KBS and Prime US REIT have acquired One Town Center in Boca Raton, Florida. The investors purchased the property for $99.5 million from a joint venture between CP Group and Siguler Guff & Co. The purchase is the third acquisition for Prime since it entered the Singapore Exchange in 2019. KBS will serve as the US-based asset manager for the portfolio.

One Town Center is a 10-story 191,294-square-foot office tower with 95% occupancy and strong in-place cash flow. It is a highly desirable asset in the market, as illustrated by the occupancy. According to data from Newmark, leasing activity was up 29% last year, and South Florida’s unemployment rate has improved, falling to 6.3% during the first quarter of 2021. Palm Beach County has the lowest unemployment rate in the region at 4.5%.

One reason South Florida’s office market is outperforming: the fintech market. The region has emerged as one of the leading fintech markets in the country. Asking rents for class-A office space in Miami Beach have rebounded to $56.66 per square foot, up 10.2% year-over-year, according to a new report from Colliers. The submarket is also highly constrained in terms of supply, especially when it comes to viable office space. Most investors, wary of high land prices, have gravitated instead toward luxury hotels or boutique condo projects, but those same factors have also kept demand booming. This is in addition to an already prominent roster of law firms, banks and public sector employers in the Downtown area.

As a result of the activity, there have been a handful of significant transactions this year, including Banyan Street Capital and a DRA Advisors LLC-managed fund’s sale of Pinnacle Corporate Park, a two-building, class-A office portfolio in Fort Lauderdale, for $58.9 million and The Related Cos., purchase of Phillips Point, an office property in downtown West Palm Beach, for $282 million.

KBS plans to upgrade the property’s common areas, including the lobby and front entry, restrooms and fitness center, as well as vacant units. CP Group has been retained as on-site property management, and Chris Lee, vice chairman and Jose Lobón, EVP of CBRE brokered the sales transaction.