Butters just paid $21 million for a three-building office complex in Boca Raton, marking the real estate firm’s third acquisition in the Palm Beach County office market in the past year.
A Butters affiliate, BREF 1900 LLC, bought the 120,000-square-foot office complex at 1900-2000 Northwest Corporate Boulevard, off Glades Road and I-95, the company said. The price equates to $175 per square foot.
Records show the seller is New York-based DRA Advisors, which had paid $19 million for the property in 2008.
CBRE brokered the deal. “There was no asking price,” said Adam Vaisman, director of acquisitions for Coconut Creek-based Butter. “Bids came in and we ended up being selected.”
Vaisman said the three buildings are currently 78 percent occupied, with tenants including Garda World; Rogers & Cowan; Milber Makris, Plousadis & Seiden; Katz & Associates and Pinkerton. The buildings have covered parking.
He said Butters plans to invest $3 million in the complex, with a goal of bringing it up from Class C to Class B, and allowing the company to raise rents by a few dollars to the low $20s per square foot. Vaisman declined to provide the buildings’ exact current lease terms. Planned capital improvements include modernizing the exterior, entrance and corridors with new carpeting, tile, paint and fixtures, as well as enhancing the landscaping.
“In the Class A market, the asking rents are upper $20s, $30s net, and we feel there is a gap between that class’s rents and the Class B rents, and we can take advantage of that,” Vaisman said. “We can raise the rents by investing some money in the buildings.”
During the past 10 months, Butters also purchased 851 Broken Sound for $6.125 million in May and 3010 Military Trail for $4.6 million in October, bringing its total office acquisition in Boca Raton to 210,000 square feet and $31.7 million.
“We just like office product in this market,” he said. “No one is building it and you can buy it below replacement cost.”
Overall in Palm Beach County, demand for office space is high, according to an Avison Young report released early this year. New construction is expected in West Palm Beach this year, such as the Gardens Innovation Center, which incorporates green building features.