Workspace Property Trust Doubles Down on Suburban Office With New Investment

Workspace Property Trust, a privately-held suburban office and industrial company, reports that Oak Hill Advisors, an alternative investment firm with more than $50 billion in assets, has led a $326.5 million investment in the company.

Founded in 2015, Workspace owns and operates 10 million square feet of suburban office and light industrial properties in markets across the country including South Florida, Tampa, Phoenix, Minneapolis and two suburban Philadelphia markets.

“We believe Workspace is in a terrific position to expand geographically and satisfy the demand for affordable, accessible suburban office space,” said Glenn August, founder and CEO of OHA in prepared remarks. “[Founders Thomas A. Rizk and Roger W. Thomas] have built an impressive company and we are excited to play a meaningful role in their growth going forward.”

Rizk, the company’s co-founder, chairman and CEO, said Workspace is poised to “accelerate our plans to expand our footprint and portfolio in key suburban markets across the country. OHA recognizes the unique and compelling opportunity facing Workspace today and we are poised to take advantage of the market dynamics to deliver value to our tenants at scale.”

While the surge in demand for suburban office space nationwide slowed the past few months, it remains a much sought-after segment given recent news of low unemployment, more jobs becoming available and the continued desire to leave urban centers, given unsteady data about COVID-19 and its variants.

During the pandemic, suburban office was one of the best performing property sectors in the US, measured by its durable income. Indeed, earlier this year, suburban offices, which offer more space—something needed in a return-to-office, social distancing setting—were outpricing urban offices.

In March suburban office growth accelerated to a 3.6% annual pace, while urban assets declined by 2.4% year-over-year. Real Capital Analytics also reported in February that suburban office prices increased 2.2% year-over-year. 

Since then, the narrative around the surging suburban office class has died down—especially as residents began to return to urban centers—but there is still plenty of demand for these assets. The US suburban office market is extremely large with approximately 2.7 billion square feet, offering opportunities for consolidation.

“This investment comes at a critical inflection point for the business,” said Roger Thomas, co-founder, president and COO of Workspace.