Located at 201 Defense Hwy., the three-story, 17-year-oldbuilding is fully occupied by several long-term tenants, whichinclude Anne Arundel Medical Systems and Alion Science andTechnology Corp. Rents are below market in the building andBelvedere Management plans to push rates as part of its valuecreation strategy.

According to Schline the building traded at an unusually low caprate--a reflection of the growing institutional investor demand forstabilized assets in Annapolis, which has a limited supply of suchassets and, in some cases, high barriers to entry. First Potomac,for instance, made its first acquisition here in June after waitingfor some time for the right asset to come on market, as reported inGlobeSt.com. Itacquired Annapolis Commerce Park East, a two building industrialflex complex for $19.3 million.

"Office vacancy rates in Annapolis are less than 3% and willremain historically low, for the foreseeable future, allowinglandlords to increase rental rates," Masi says. Meanwhile,development costs for new office properties remain high. Atminimum, new office product will demand rental rates in the low$30s. Power Technology Center also features covered and surfaceparking and tenant balconies. It is close to Annapolis Mall,Arundel Medical Center, Downtown Annapolis and the US NavalAcademy.