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NEWPORT NEWS, VA-Austin Fairbanks Trust, a family trust in the northeast, has purchased a 77,125-sf office/flex asset here for $5.9 million in a 1031 exchange from Middle Ground Co. LLC. Eric Robison, Thomas Rowley, Teresa Nettles and Robert Phillips of Thalhimer’s Investment Brokerage Group represented the seller and has been retained as the leasing agent. The buyer, which was investing the proceeds from the sale of an office property in Florida, represented itself.

Located in the Oyster Point Office Park at 709 Middle Ground Blvd., the multi-tenant building is currently 87% occupied, reflecting the strong market here, Robison tells GlobeSt.com. “The total vacancy rate in the market is around 5%.” He adds there is little new supply expected to enter the market. “There are very few, if any, developable parcels within this park and those that are available are owned by the Oyster Point Economic Development Authority.” Average asking rental rates are around $12 per sf.

Some 10 potential buyers bid for the property, which went on the market at an asking price of $6 million. Robison says investor interest is strong in the area’s office/flex market. “The low vacancy rate is one reason and there is good potential for increased rental rates.” Demand for space is strong among firms that are priced out of the office market, although he adds that this can be a double-edge sword as such tenants tend to move back into class B space when the market softens. Another plus for investors, he adds, is that cap rates have remained steady, averaging around 8% on per forma income.

One comp in the submarket was a Liberty Trust office portfolio trade at the beginning of the year. The 132,445-sf four building portfolio (two of which were office/flex) sold for $15.2 million.

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