Office Depot Sells Boca Raton HQ in Leaseback Deal

ODP, parent company of the Office Depot and Office Max, has agreed to sell its 650K SF headquarters office campus in Boca Raton to a partnership of two Florida developers, who will lease a portion of the campus back to the office supplies giant in a two-year lease deal.

Boca Raton-based PEBB Enterprises and Miami-based BH Group are buying the ODP campus, which is located on a 29-acre site at 6600 North Military Trial, according to a report in the South Florida Business Journal.

The sale price for the property, which ODP acquired for $132M in 2017, was not disclosed, the Journal report said.

ODP has been slashing costs to recoup from supply chain disruptions during the pandemic and cope with higher transportation costs as inflation has spiraled. The company’s Q2 2022 earnings report said ODP has closed 71 retail outlets in the past year as Q2 2022 sales were $2B less YOY than Q2 2021.

ODP CEO Gerry Smith said in the Q2 earnings statement that ODP is in the midst of an operational realignment creating four distinct business units—one B2C and three B2B—to give the company greater flexibility, more focused routes-to-market and greater growth potential.

“The strength of our distribution platform and flexible pricing strategies helped to offset some of the market-wide challenges related to supply chain constraints, higher transportation costs and inflation,” Smith said, in the earnings statement.

ODP reported retail sales of $811M in Q2, down 11% YOY, which the company partially attributed to its program of planned store closures, which included the shuttering of a dozen retail outlets in the second quarter, leaving ODP with a total of 1,020 stores at the end of June.

PEBB has been busy in recent weeks acquiring office properties on its home turf. In addition to the deal for ODP’s HQ, last month acquired the Meridian Office Center in Boca Raton for $30M in a joint venture with Greenwich, CT-based Contrarian Capital Management.

The two-building Meridian campus, at 6551 and 6601 Park of Commerce Boulevard, encompasses a total of 202K SF. CBRE represented the seller in the deal, Montvale, NJ-based Ivy Realty, who paid about $27M for the property in 2015. The campus was built in 1998.

Meridian Office Center is in The Park at Broken Sound, a 700-acre mixed-use business park in Boca Raton. Lexis Nexis and Cross Country Healthcare are anchor tenants at the Meridian campus.

PEBB has made several acquisitions of properties at The Park at Broken Sound, including the $15M purchase last year of a three-story office building at 5900 Broken Sound Parkway.

In 2018, PEBB partnered with an affiliate of Chicago-based RAIT Financial Trust in the $42M acquisition of ADT’s 10-acre global headquarters at The Park at Broken Sound.