SKB bought the two office buildings subject to a long-termground lease and acquired the parking garage on a fee-simple basis.The complex, which was developed in the 1980s, was 95% leased atthe time of the sale.

|

SKB says that the high level of leasing reflects thefundamentals of the Kapiolani Corridor submarket, near the centralbusiness district of Honolulu, where the tenant roster includes amix of finance, insurance, healthcare, engineering firms andgovernment entities. More than 50% of the rentable space is leasedby investment grade tenants, including Geico, ADP, ProgressiveInsurance, ING North America and Kaiser Foundation Health.

|

Rents have been rising in the submarket because of its lowvacancy, but the rates are generally not enough to justify newconstruction, says SKB Chairman Bob Scanlan. This means "it'sunlikely that an abundance of new office product will come onlineduring the holding period," Scanlan says.

|

SKB President Todd Gooding adds that, with employment growthexpected to continue and half of the Pacific Park Plaza's squarefootage rolling in the next four years, there is ample opportunityto capitalize on market rent growth.

|

The equity necessary for the acquisition was provided by SKBReal Estate Investors LP and a co-investment vehicle managed bySKB. The business plan involves approximately $1.5 million in bothcapital and tenant improvements and a six-year holding period.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.