Listen to this articleNew York-based DRA Advisors has sold two glass office buildings just off Highway 169 in Plymouth, according to a property value certificate released this week.
Northpath Investments purchased both properties in one transaction for $23.3 million, a price 65% below what DRA paid for the offices.
The two properties are located at Highway 169 numbers 505 and 605 in Plymouth. DRA purchased the 605 building in 2015 for $31.5 million and the 505 building in 2018 for $36.1 million, according to previous reports from Finance & Commerce.
According to a Catylist listing of the property, building 505 was built in 1987, is 12 stories tall and has about 25,000 square feet of space. Building 605 was built two years later, is also 12 stories tall and has just under 19,500 square feet. Both buildings have an occupancy rate of under 75%, according to the listing.
Gershon Alexander, Northpath’s chief executive, said in an interview Wednesday that his company was attracted to the site because he believes the building offers many advantages and the Twin Cities market is very popular. Alexander said his company is confident it can fill the buildings’ vacant space.
“Of course there are concerns, but we believe there is enough vibrancy in this market that we can fill it,” he told Finance & Commerce. “We’re going to do a capital improvement project, we’re going to put some money into the building to make it look nicer, we’re going to upgrade the amenities and we’ve brought in a designer who is really working with us.”
Northpath typically looks for opportunities to increase the value of a property, Alexander says.
“There is leasing in this market and we can develop the best product in the market,” Alexander said. “We are pretty confident we will lease them.”
Northpath, a New York-based company, does not own any other assets in the Twin Cities metropolitan area. The majority of its portfolio is on the East Coast, according to the Northpath website.
With a total of 479,462 square feet, the price is $48.49 per square foot, nearly $100 less per square foot than what DRA paid for the two buildings.
Hennepin County tax records show the estimated market value of the properties as $23.8 million for 605 and $31.1 million for 505. Previous reports indicated that the occupancy rate was 89% when Artis REIT sold 605 to DRA.
According to previous reports, both buildings were constructed by Ryan Cos.
The sale was brokered by John McCarthy, Kyle Delarosby and Peter Nicoletti of Colliers. McCarthy declined to comment on the sale, citing client requests.
According to a Colliers office market report for Q2 2024, the I-394 corridor submarket where Plymouth is located has an overall vacancy rate of 11.5%, while Class A buildings have a vacancy rate of 27.6%. The report says there was a “significant” increase in vacancy of 17.7% year-over-year for Class A office buildings.
In an interview in July about the report, Colliers Executive Vice President Michael Gelfman said that a lot of prime office buildings had been brought to market and not sold.
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