Quote:
Originally Posted by AbortedWalrus
Dunno. I forget what all projects Parkway has done. I know they are just finishing 17,000 SQFT of retail and 330 apartment units only a few blocks away with the Hanover North Broad project.
I think this space is close enough to CC (two Subway stops), and it's right off of the Vine Street Expressway, so it has super easy commuter access, that it could draw interest in office space. 1500 Spring Garden is entirely office space as I understand (1 million sqft?), is 90% occupied, and that building sold for $180M recently. I don't really think there are as many significant challenges to the office space as people would think.
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I agree that the location is decent for commuters, and even walkers from nearby neighborhoods. Between the subway stops and proximity to 676 it has a lot going for it.
I can confirm that 1500 Spring Garden is 100% office because I have the OM from when it sold. It was 88% occupied as of 2013. Since then 20% of the building has rolled over so I don't know if they vacated or renewed. 16.8% of that roll is Blue Cross, and they expire this Jun for 186.6k SF. No idea if they renewed or have plans on relocating or vacating. Stabilized occupancy for class A space (which is really limited in that submarket) is probably 80-85% so that price tag on the 1500 Sale is what someone would pay for a fully stabilized property. At $180M ($162 psf) price tag is an 8.25% cap rate on in place NOI (2013) - which makes sense because most class A building in better locations go for closer to a 7 cap, and 1500 is a tired building as well. They were underwriting $21+E rents at the time, which means they were probably taking $19-20
Unfortunately I don't know what the allocation of that $300M is to the pure office portion for parkway, so I can't evaluate the PSF accurately / although again this would be somewhat of a different product than 1500. If I had to make a guess, they'd need something substantial to justify fair market returns. $35-40 psf is my guess - which could even be light? Just seems like a lot to pay when I can pay that same amount and have a Market Street address.