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ANNAPOLIS, MD-A rare class A office building here has traded for $11.2 million. Called the Power Technology Center, Belvedere Management purchased the 63,100-sf building from Cousins Team II LLC. The Manekin Investment Services team of Donald Schline, Owen Rouse and Gregory Masi brokered the transaction.

Located at 201 Defense Hwy., the three-story, 17-year-old building is fully occupied by several long-term tenants, which include Anne Arundel Medical Systems and Alion Science and Technology Corp. Rents are below market in the building and Belvedere Management plans to push rates as part of its value creation strategy.

According to Schline the building traded at an unusually low cap rate–a reflection of the growing institutional investor demand for stabilized assets in Annapolis, which has a limited supply of such assets and, in some cases, high barriers to entry. First Potomac, for instance, made its first acquisition here in June after waiting for some time for the right asset to come on market, as reported in GlobeSt.com. It acquired Annapolis Commerce Park East, a two building industrial flex complex for $19.3 million.

“Office vacancy rates in Annapolis are less than 3% and will remain historically low, for the foreseeable future, allowing landlords to increase rental rates,” Masi says. Meanwhile, development costs for new office properties remain high. At minimum, new office product will demand rental rates in the low $30s. Power Technology Center also features covered and surface parking and tenant balconies. It is close to Annapolis Mall, Arundel Medical Center, Downtown Annapolis and the US Naval Academy.

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