Rizk and Thomas pay $170M for Suburban Office Portfolio

Thomas Rizk and Roger Thomas’ Workspace Property Trust added 1 million square feet of suburban office space to its portfolio, about a quarter of it in suburban Chicago, as the firm closed out a two-phase transaction with Griffin Realty Trust that totaled $1.3 billion

The latest acquisition includes properties in the Chicago, Dallas and Bay Area markets, as well as Ohio and North Carolina, which Workspace bought for a combined $170 million.

“Investing in the suburban office market has evolved quickly from a contrarian play into a sought after, mainstream and competitive sector as the suburbs continue to perform well, characterized by continued robust leasing activity field by strong demand from larger, national tenants to increase their footprint outside of central business districts,” Rizk said in prepared comments.

With the move into the Chicago market, Workspace joined another pair of firms, Shaya Prager’s Opal Holdings and Katherine Cartagena’s Prana Equities, that have made huge bets on suburban offices during the pandemic that have recently focused their acquisitions on the Midwest. Ventures of Opal and Prana teamed up to spend more than $2 billion on suburban offices across the nation, with nearly $1 billion in spending in the Chicago area alone, counting their purchase of the Leo Burnett building downtown.

More than two-thirds of the total commercial office inventory in the U.S. – more than 2.5 billion square feet – is located in the suburbs, according to a CBRE report. Nationally, the downtown vacancy rate went up by 40 basis points to 17.4 percent from Q2 to Q3 of 2022, while the suburban vacancy rate increased by 20 basis points to 16.9 percent during the same timeframe, CBRE said.

Workspace’s new suburban Chicago building is the 280,000-square-foot Three Overlook Point in Lincolnshire, Ill. The other assets included in the final phase of the sale by Griffin include the 130,000-square-foot 3929 West John Carpenter Freeway in Irving, Texas;140,000-square-foot 350 East Plumeria Drive in San Jose, Calif.; the 410,000-square-foot 6380 and 6440 Aviation Way in West Chester, Ohio; and the 100,000-square foot 7628 Thorndike Road in Greensboro, N.C. Workspace declined to provide the sale prices of the individual properties.

Mason Capital’s Jordan Bock represented Workspace in the negotiations. Griffin is retaining minority ownership in the portfolio. UBS provided debt financing. Workspace’s total portfolio includes 19 million square feet across more than 200 buildings in 23 metropolitan areas.