The buyer will spend more than $1 million in capital improvements to the complex, says Andrew Hayman, executive VP with the company. The property had been built almost 20 years ago strictly for General Motors Corp., but the automaker vacated part of the park. A lender had taken the park from ARCAP, but the company bought it back in 2006. "We plan on getting the property stabilized to 90% occupied," Hayman tells GlobeSt.com.
He says he bought the park at 50% of replacement cost, in the $30 million range. "It's got a good tenant mix, a lot of R&D, including hybrid engine development and electric car companies," he says. DaimlerChrysler, BMW and GM are part of a joint venture in the park developing hybrid engines. Other tenants include Raytheon Professional Services, Hutchinson Automotive Extrusion and Compact Power, a division of LG.
The average lease rate for the property is $15 gross, Hayman says. "It's hard to pinpoint the lease rate. We've got tenants that are 100% office, and some that are at least 70% R&D," he says.
Even though the Troy office vacancy rate is at more than 25%, according to a second quarter CB Richard Ellis market report, Hayman says he's confident that his company made the right decision to buy. "You buy something cheap enough, it has a higher potential to do well," he says. "Sure, if you bought something in the area five years ago, you're not a happy camper, but buying today, there's a lot of opportunity."
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