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All of a sudden Boomtown, USA

Al Harris May 17, 2011 3

2011 is shaping up to be the year of the deal.

Commercial real estate firms have reported $160.6 million in sales from 34 deals for the first four months of 2011, up more than 200 percent from the $47.9 million in sales for the same period in 2010.

Just last week, a local office space developer announced one of the biggest deals in recent memory. Al Lingerfelt spent almost $100 million buying a massive suburban office space portfolio from Liberty Property Trust.

BizSense delved into its Pipeline section and tallied up the commercial real estate sales reported so far this year. The data in the Pipeline is self-reported by local firms, and the figure might not include every transaction in the metro area. But it is representative of a surge in investment activity. And brokers say they’re seeing it in the field.

“The office market for sales is just beginning to pick up a little steam, and I suspect that we will see some fairly steady activity from here on out,” said Walton Makepeace, a broker with CB Richard Ellis.

Makepeace was one of the brokers involved with the second-largest deal to move forward this year: Dominion Realty Partners’ $63.7 million sale of Riverside on the James to McLean-based American Real Estate Partners.

“I think that deal will start some momentum in downtown Richmond for office building sales,” Makepeace said.

Other large deals this year include the $26 million purchase of the Byrd Center Business Park near the airport by a joint venture between a real estate fund based in Miami and another in Dallas and an $18 million sale lease back by Richmond Cold Storage on one of their refrigerated warehouses. Also of note, Brandywine Realty Trust bought two Innsbrook buildings for $12.54 million.

By comparison, the largest deal during the first five months of last year was Liberty Property Trust’s sale of a 221,000-square-foot industrial building to Richmond International Raceway for $7.94 million.

Makepeace said that REITs are becoming active again and that he has seen a large umber of prospects that have been unable to buy in hot markets such as Washington turn to secondary markets such as Richmond.

“The past couple of years have not been a great environment to sell an office building,” Makepeace said. “I think that’s changing now.”

Matt Braun, a broker at Cushman & Wakefield | Thalhimer, agrees that this year will be an improvement for real estate sales.

“Investors and user-buyers have picked up a little more, trying to take advantage of the market before it changes,” Braun said.

Although Braun said the market is rebounding and that morale is up among the brokerage community, he is quick to put the numbers in perspective.

“Last year was such a down year, a normal amount of activity will seem like a big increase,” Braun said.

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3 Comments »

  1. Bruce Anderson May 17, 2011 at 7:48 am - Reply

    Nice to see the buy/sell activity. There’s some construction percolating, too.

  2. Brad Bailey May 17, 2011 at 7:18 pm - Reply

    Let’s hope the recent sales activity will help loosen up the underwriting at the banks. Perhaps the appraisers can also start to show some “guts” and move the cap rate to where it should be.

  3. Katie May 25, 2011 at 6:13 pm - Reply

    Commercial REITs really seem to be doing well this year. Another big transaction I read about was by Cole REIT. Cole acquired the University of Phoenix office complex in Phoenix, Arizona for $170 million and I believe it was the largest transaction in Arizona history. I’m not surprised to that Matt said that interest from investors has increased, you’d think now would be a great time to invest.

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