This Office Market is Gaining Strength

MIAMI—A three-story, 20,000-square-foot office building in Hollywood, FL has traded hands. An affiliate of RAF Ridge, a New York-based real estate investment firm, snapped up the office asset.

Aztec Group senior managing director Howard Taft and director Charles Penan, arranged the $6.55 million sale and subsequent $3.9 million financing. It is located at 3801 Hollywood Boulevard. Bank of America occupies 100% of the multi-tenant office building.

“One of the factors that attracted the out-of-market buyer to purchase the office property is its strong tenant roster and attractive location along Hollywood Boulevard,” says Taft. City National Bank provided the financing, with terms that include a 65% loan-to-value ratio, five-year term, 25-year amortization schedule and 4.25% fixed interest rate.

“With Broward County's office market gaining strength and investors seeking income-producing properties to add to their real estate portfolios, this off-market transaction represented a unique investment opportunity for the New York buyer,” says Penan.

According to Avison Young, investor confidence in Broward County office buildings remains strong thanks to an active leasing market and rising rental rates. Avison recently brokered the sale Miramar Professional Plaza, a 29,400-square-foot office building in Miramar, FL, recently sold for $3.3 million. That's not a high price but the appreciation is staggering. The property tripled in value within two and a half years.

“Many investors took risks by purchasing underperforming assets between 2010 and 2013, however they are now able to realize incredible returns,” says David Duckworth, vice president of Investment Sales with Avison Young. “We are advising many of our clients to sell stabilized assets now, and redeploy capital into distressed assets or to upgrade the quality of their portfolio.”

Broward's office market has seen plenty of activity on the acquisition front. KBS Realty Advisors just snapped up Weston Corporate Center I and II, a class A development. The assets are located three miles south of the intersection between Interstate 75 and Interstate 595.