Oak Hill leads $327M bet on suburban office market

Investment firm believes shift away from downtown areas could be a permanent one

National /
Aug.August 24, 2021 10:19 AM
Oak Hill Advisors CEO Glenn August and Workspace Property Trust CEO Thomas Rizk (Oak Hill Advisors, Wordspace Property Trust, iStock)

Oak Hill Advisors CEO Glenn August and Workspace Property Trust CEO Thomas Rizk (Oak Hill Advisors, Wordspace Property Trust, iStock)

Will the pandemic bring new interest to the suburban office market? Oak Hill Advisors believes so.

A group led by the alternative investment firm is putting $326.5 million in Workspace Property Trust, a Pennsylvania-based REIT specializing in suburban office properties near Tampa, Phoenix, Philadelphia and Minneapolis, among other markets, the Wall Street Journal reported.

The firm already owns 10 million square feet of space, according to the Journal, and aims to use the debt and equity investment to spend another $5 billion on acquisitions over the next five years with the new investment.

It’s the first investment by Oak Hill’s real estate unit since its formation last fall, according to the Journal. The unit is led by Matt Borstein, who arrived at the firm last October after a decade at Deutsche Bank, where he was most recently the global head of its commercial real estate business.

Suburban office space has been gaining interest from investors as the pandemic has inspired some employees to move away from cities. Oak Hill and Workspace are betting that employees will be interested in working closer to where they live as offices reopen.

In some markets, that bet may be safer than others. In Chicago, for instance, the suburban office vacancy rate hit a record-high of 26.1 percent during the second quarter.

Workspace has maintained a high-level of activity since the pandemic, signing over 100 leases since it began. The company also claims that 99 percent of its tenants continued to pay rent during the pandemic.

[WSJ] — Holden Walter-Warner





    Related Articles

    arrow_forward_ios
    Tankhouse’s Sam Alison-Mayne with 452 Union Street (Facades Plus, Google Maps, Getty)
    Multifamily deals dominate strong week of NYC i-sales
    Multifamily deals dominate strong week of NYC i-sales
    Steve Roth and renderings of 260 11th Avenue (Getty, Profile New York)
    Vornado lays out vision for Otis Elevator Building complex
    Vornado lays out vision for Otis Elevator Building complex
    From left: Arch Companies' Jeff Simpson and Hello Living's Eli Karp along with a rendering of 1580 Nostrand Avenue (Getty Images, Arch Companies, Hello Living)
    Eli Karp’s Hello Living says goodbye to Flatbush project
    Eli Karp’s Hello Living says goodbye to Flatbush project
    A photo illustration of Daniel Brodsky and 75 West End Avenue (Getty Images, Google Maps)
    Brodsky brings challenge to NYC Airbnb law
    Brodsky brings challenge to NYC Airbnb law
    (Illustration by The Real Deal with Getty)
    How illegal Airbnbs slip through the cracks
    How illegal Airbnbs slip through the cracks
    FSA Capital’s Benjamin Clyburn and 133-09 37th Avenue in Flushing (Google Maps, Breaking Ground, Getty)
    Brian Pun’s FSA Capital plans 173K sf project in Flushing
    Brian Pun’s FSA Capital plans 173K sf project in Flushing
    Brookfield Properties’ Brian Kingston with Two Manhattan West (Brookfield Properties, Getty)
    Hedge fund finds 283K sf at Two Manhattan West
    Hedge fund finds 283K sf at Two Manhattan West
    Savills' Nick Farmakis with 655 and 767 Third Avenue (Loopnet, Getty, Savills)
    Third Avenue: The land of “leave-behind”
    Third Avenue: The land of “leave-behind”
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...