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(Crystal Proenza is associate editor of Real Estate Florida.)

JACKSONVILLE, FL-The market for big deals is not dead, say local brokers after learning of Harbor Group International LLC’s recent sale of the 22-story Wachovia Tower office building at 225 Water St. for $51.4 million. The seller described the buyer as a public REIT that could not be disclosed. According to the special warranty deed issued by a circuit court in Duval County, the buyer is Hub OEC Properties LLC based in Newton, MA. Barry M. Portnoy and Adam D. Portnoy from Newton, MA and Michelle Dreyer from Wilmington, DE are listed as managers of the LLC in documents submitted to the Florida Department of State. Local brokers say the price paid for the building, which they call one of the most valuable office assets in the city, is “top of the market.”

Norfolk, VA-based HGI, a private real estate investment and management firm, purchased the building nearly five years ago for $38.3 million. T. Richard Litton Jr., president of HGI, says the timing for the sale is consistent with the firm’s typical holding period for office assets. He tells GlobeSt.com that his company assured a good return on investment by purchasing a quality asset and using a hands-on leasing approach, keeping very high occupancy throughout their ownership.

The sale price of the Wachovia Tower, listed with 318,568 square feet of leasable square feet, is approximately $160 per square foot, says Jeff Evans, a broker associate with Colliers Dickinson in Jacksonville who was not involved in the transaction. “It’s a top-of-the-market sale from an investment standpoint,” Evans tells GlobeSt.com. According to the most recent Colliers market research report, sales in the CBD range from $105 to $111 per square foot, including HGI’s purchase of the 269,176-square-foot BB&T Tower for $30 million. “I think the sale of Wachovia Tower can’t help but prop the market up a little bit,” says Evans. “There is a recession, but our investment market is as healthy as anywhere in the country.”

Jeffrey R. Dunne of CB Richard Ellis brokered the transaction. He tells GlobeSt.com that the deal involved an assumed debt of approximately $40 million with the balance of the price paid in cash. “The REIT wants to own that kind of asset in that kind of market,” Dunne says, adding that the deal was made attractive by the fact that the property shares a lobby with “the best hotel in town,” the 353-room Omni Hotel.

The 22-story Wachovia Tower was built in 1985 and is currently 98% occupied, according to seller HGI. Wachovia currently occupies 144,000 square feet in the building, with major tenants including commercial law firm Smith Hulsey & Busey with over 25,000 square feet, CB Richard Ellis with 10,000 square feet and Foundation Financial with 10,000 square feet. Leasing rates at the building are approximately $23 to $24 gross.

According to a Jacksonville market spotlight article in the latest issue of Real Estate Florida magazine, besides a 50,000-square-foot building already under way, no new construction is on the horizon for Downtown Jacksonville for the first time in several years. Office vacancy has been rising and is at 16.7% and average class A rental rates are $21 per square foot, says CB Richard Ellis.

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