DDR Sells Silver Spring Office/Flex for $31M

SILVER SPRING, MD-As part of its push to recycle non-core assets off of its balance sheet, Beachwood, OH-based DDR has sold a local office/flex portfolio for $31.1 million. The buyer is a joint venture between Bernstein Management and Spectrum Partners. Jonathan Carpenter and James Wellschlager of Cassidy Turley’s Capital Markets Group represented the seller.

The four-building, 288,392-square-foot portfolio, called Tech Center 29, is 93% occupied. It is an unusual asset for the Silver Spring submarket, Carpenter tells GlobeSt.com.

“Silver Spring is an infill market that is supply constrained and has high barriers to entry for development,” says Carpenter. “This product serves a niche user base as its tenants need flexible office space, which can be hard to find in Silver Spring.” The occupancy rate is reflective of that, he adds.

DDR owned the property for more than 10 years. Its decision to sell “was the classic REIT play we are seeing now of paring down assets to focus on categories that are core to them,” Carpenter says, which in DDR’s case means retail.

Similar transactions include Washington Real Estate Investment Trust’s sale last year of a local two-million-square foot industrial portfolio, which also included two office buildings, for $350 million, and this year’s sale by Prologis of a 588,009-square foot office/flex portfolio located throughout three business parks in Columbia, MD. Carpenter points out that the Cassidy Turley team brokered that transaction, which was also a non-core sell-off, as well.

The buyers have been in active in the last few years acquiring local assets, Carpenter says. “They understand the local dynamics and supply-demand story.” For instance, this particular portfolio is positioned to benefit from Maryland’s ICC, or Intercounty Connector, he says. “All the buyers looking at the portfolio thought the ICC would be an advantage,” he says.