OWINGS MILL, MD—On June 23, 2014, First Potomac entered into a non-binding contract to sell the four remaining buildings at Owings Mills Business Park, according to the REIT's newly-released Q2 earnings report.

The buildings total 180,500 square feet and should all go well, the sale will close in Q2 or Q3. The REIT is not tipping its hand as to the prospective seller or sales price, other than to say that based on the anticipated trade it has recorded an impairment charge of $4 million for Q2.

All of which is business as usual for the REIT—it has been, like other companies, regularly recycling capital, repositioning and pruning its portfolio for maximum advantage. What is interesting to note, though, is that a buyer is on the scene for these buildings which decidedly fall in the category of suburban office.

Throughout the recovery suburban office has generally been left for dead by investors and buyers. Now, though, we see glimmers here and there that the market is recognizing the tremendous upside these investments can present.

A few properties have traded in Maryland's suburbs in the last few months. In Frederick, 800 Oak St., a 209,000 square foot office fully occupied by United Healthcare traded for $27.5 million. Inland American REIT sold the building to American Realty Capital. Montrose Office Center in Rockville has also traded for $17.1 million to A&A Properties. Garrison Investment Group sold the barely half occupied 147,481 square foot building. Another example of a buyer taking a measured bet on suburban office is Matan Cos., which acquired a four-office portfolio in Germantown from Bentall Kennedy at the beginning of the year for $129 million.

Lenders are not completely averse to underwriting these assets, JLL notes. The may approach suburban DC office product more conservatively, but will still pursue them due to the amount of capital available and the higher yield potential relative to a downtown DC asset, it observed in a recent report.

Another endorsement of this asset class came during a recent Marcus & Millichap webinar.

Marcus & Millichap's John Chang, First Vice President of Research Services, argued that suburban office has become a hidden opportunity for yield, a point with which Gladstone Commercial Corp.'s Andrew White, who joined the McLean, VA-based company last year as a managing director to lead Western Region acquisition activities, agreed.

Office construction has lagged for the last several years because assets are easily available below replacement cost, White says—and in some secondary markets can be snapped up for as much as 25% below replacements costs. These fundamentals represent an interesting opportunity, he said during the webinar.

"We are very bullish on office in secondary markets [because of their] higher risk adjusted returns."