Arborcrest Corporate Campus Sold for $143M

Columbia, Maryland-based Corporate Office Properties Trust (COPT) announced that it completed the sale of the Arborcrest Corporate Campus in Plymouth Meeting, Pennsylvania, for $143 million. The four-building office project was sold to San Francisco-based Spear Street Capital in a deal brokered by JLL. Terms of the deal were not disclosed, but Spear Street Capital said it has retained JLL to continue both leasing and property management.

"We are looking for distinctive properties with proven appeal to a broad array of tenants. In addition, we are drawn to situations with substantial value creation opportunities either through new leasing or additional development. Arborcrest has an impressive roster of existing tenants but also has the capacity for significant new development," John Grassi, CEO of Spear Street Capital, told CPE.

Located at 751, 721 and 731 Arbor Way, Arborcrest Corporate Campus is a sprawling property that was once solely occupied by Unisys; in 1997, Corporate Office Properties Trust entered into a sale-leaseback deal with the company. Since then, COPT has invested nearly $100 million into repositioning the property and creating a campus for multiple tenants. The campus consists of four operating properties totaling 654,000 square feet that are 100% leased, plus 785 Jolly Road, an approximate 190,000 square foot redevelopment opportunity, and 27 acres of additional land.

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REITs See Increasing Demand for Office Leasing Deals

In a new article from CoStar Group, notes from recent earnings conference calls reveal that REIT landlords have made special note that they see demand for 2014 office leasing deals increasing. CoStar Group reported that the overall U.S. office vacancy rate continued to decline, dipping from 12.7% at mid-year 2012 to 12.1% as of June 30, 2013, and projected to move steadily toward a 10.5% - 11% vacancy range by 2016. Some quotes on the state of the markets from industry leaders follow:

"I think [recovery] is probably a little early for the suburbs," said Marc Holliday, CEO of SL Green Realty Corp. "The financing markets are still not terribly liquid and the sale markets -- there's not a lot of transaction activity. So we're still in a hunker-down mode out there, trying to block and tackle and do as much leasing as we can in some very challenging markets."

"We continue to see demand for new properties in strategic location," said Steve Budorick, executive vice president and COO of Corporate Office Properties Trust. "Our development leasing goal for 2013 was 400,000 square feet. We did 100,000 square feet in the first quarter and over 460,000 square feet in the second quarter alone, putting total development leasing for the year well over a half of million square feet."

"Most office construction that is occurring is build-to-suit, but that varies by market. The strongest markets, such as San Francisco, San Jose and Houston, are seeing speculative construction due to a lack of suitable space available in the market," said Andrea Cross, national office research manager for Colliers International. "We also are seeing tenants in industries in which the competition for talent is fierce, notably tech and energy, building high-quality office space with amenities to attract and retain workers."

"You're seeing a greater number of smaller type deals at $100 a square foot being done than at any time in the past. You're seeing an improving national economy and a very strong local economy," said Steven M. Durels, executive vice president and director of leasing of SL Green Realty. "So I think the fundamentals are there and it's at a point in time that job growth continues to get us to a point of supporting the demand that we'll enjoy that spike in rents."

For more news and information visit Blumberg Capital Partners.

Silver Spring Office Building Sold for $21.3M

11800 Tech Road in Silver Spring, MD traded hands this month as Corporate Office Properties Trust (COPT), an office REIT, sold the property to a joint venture between Finmarc Management and the Goldstar Group, which previously owned the building. HFF marketed the property exclusively on behalf of the seller and closed the transaction free and clear of debt. COPT purchased the property in the fall of 2002 from the Goldstar Group for $27.3 million as its first building buy in Montgomery County according to a CoStar report.

The 228,179-square-foot flex office building was built in 1967 and renovated in 1997. The property was 82.5% leased at the time of sale to six tenants including the General Services Administration, Comcast Cable, Kaiser Foundation Health, BioCore Medical and Holy Cross Hospital. 11800 Tech Road is located in the North Silver Spring/Route 29 submarket of Silver Spring approximately 14 miles north of Washington, D.C.

For more news and information visit Blumberg Capital Partners.

Plans Approved for College Park Office Campus

Corporate Office Properties Trust (COPT) submitted a plan that was approved this month by the Prince George's County Planning Board to build a three office building campus in College Park, MD. According to a Washington Business Journal article, the transit-oriented plan includes 450,000 square feet of office space and a 160,500-square-foot parking garage. COPT is developing the 13.4-acre, state-owned property in partnership with the University of Maryland which sits adjacent to the Kenilworth Avenue development site. The completed complex will total about 750,000 square feet of office space spread across eight buildings.

PG County Board members urged further efforts to limit traffic and discourage commuters from depending on the parking garage, which will not be constructed until the last building is completed in the third and final phase of development. Lawyer Thomas H. Haller, representing the joint development, said additional traffic management efforts are possible, but he noted that they could be beyond COPT's ability to pay for them.

"The burden literally falls on the state and the University of Maryland," he said.

For more news and information visit Blumberg Capital Partners.