Upscale Office Buildings In Broward & Palm Beach Hit The Market

About a dozen high-end office buildings are up for sale in Broward and Palm Beach counties as owners look to cash in before interest rate hikes accelerate.
The Radice II and Cypress Park West, two Fort Lauderdale complexes fronting Interstate 95 near Cypress Creek Road, are among more than 1 million square feet of “Class A” assets listed for sale, real estate brokers say. Microsoft, with nearly 50,000 square feet, is the main tenant at the 230,000-square-foot Cypress Park West.
Also on the block are Presidential Circle in Hollywood and Peninsula Plaza and Peninsula Executive Center in Boca Raton. The three properties are owned by Carl DeSantis, who founded the former Rexall Sundown Inc., a vitamin and nutritional supplement maker.
Jarden Corp., the predecessor to consumer products maker Sunbeam, leases more than three quarters of the 188,000-square-foot Peninsula Executive Center.
Jonathan Kingsley, a senior vice president with Jones Lang LaSalle in South Florida, said he can’t remember a time in the past two decades when so many quality office properties were in play at once.
“It’s pretty prolific,” Kingsley said. “All these owners are scrambling to get out of the market now while prices are at their height instead of having to settle for something less later.”
The only office complex that appears to be distressed is Radice II, which is being sold by a lender, Kingsley said.
The commercial real estate market is slowly recovering from the recession. Rental and vacancy rates have stabilized after several years in which landlords have struggled to attract and retain tenants.
But the debt market is becoming a concern as historically low interest rates start to creep up. If buyers have to factor higher rates into their purchase prices, the buildings aren’t likely to fetch as much money, brokers say.
Low interest rates are driving the sales activity, but so too is the general belief that the economy is improving, said Bob Sullivan, president of RJS Realty Group in North Palm Beach.
“I just think there’s so much pent-up capital sitting on the sidelines,” Sullivan said.
The list of properties for sale includes the Esperante building in downtown West Palm Beach, one of Palm Beach County’s most prestigious office addresses. Owners of Lakeside Office Center in Plantation and Plaza 100 in Fort Lauderdale also are looking for buyers.
Properties that could soon be on the market include the trophy Las Olas Centre in downtown Fort Lauderdale, Venture Corporate Center in Hollywood and Lakeshore Plaza in Sunrise, brokers say.
The more favorable business climate should allow buyers to further increase occupancy and rental rates, said Peter Reed, of Commercial Florida Realty Services in Boca Raton.
Another factor in buyers’ favor: a lack of office construction in recent years, limiting choices for tenants.
“As a landlord, you’re always worried about competition,” Reed said.
Source:  Business Week



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