Hotwire, Chrysalis Health become landlords to offset office occupancy costs

Both companies bought more building than they needed in Broward County

Mar.March 29, 2017 03:00 PM

Hotwire Comunications’ new headquarters in Lauderhill and Ryan Goggins

Some companies, like Hotwire Communications and Chrysalis Health, are buying office buildings bigger than they need and leasing surplus space to offset their occupancy costs, as demand for offices rises.

“I do a lot of tenant outreach on behalf of some of our landlord clients, and a lot of time the initial feedback I get from them is, they want to own something rather than continue to lease,” Ryan Goggins of Colliers International told The Real Deal.

The reason: vacant offices are getting scarce in South Florida. In Broward County, Marcus & Millichap has forecast a drop in office vacancy rates to 15.8 percent this year from 16.4 percent in 2016 and 17.1 percent in 2015.

“Broward County employers are set to hire at a steady clip in 2017, fueling demand for office space that will compress the vacancy rate and support rent growth,” Marcus & Millichap reported. “Limited development in the urban centers of Fort Lauderdale and Hollywood bodes well for these markets, driving demand to existing assets.”

Consider several recent Broward transactions Colliers International has handled.

The brokerage just helped Hotwire, the fiber optics telecommunications company, to sell a surplus office building in Lauderhill. Colliers International also leased all the vacant space in the telecom company’s new headquarters in the Cypress Creek area of Fort Lauderdale.

Hotwire sold the three-story, 42,040-square-foot building at 3521 West Broward Boulevard in Lauderhill for $2 million in an all-cash transaction. The new owner, Chrysalis Health, had been shopping for “a building that made sense to own. They saw that they could buy the building and lease out some of the space and offset their costs,” Goggins said

Prior to the sale, Goggins and two of his colleagues at Colliers International, Jonathan Kingsley and Jarred Goodstein, recruited two tenants to lease 60,000 square feet at 2100 West Cypress Road in Cypress Creek, Hotwire’s new headquarters building that it bought last year for $21.5 million.

Hotwire purchased the 180,000-square-foot headquarters building in February 2016, occupied 120,000 square feet and hired Colliers International to lease the rest of the space. Liberty Tower took 40,000 square feet and State Farm leased 20,000 square feet. “The building features a gym and cafeteria plus conference facilities and generators that guarantee uninterrupted power,” Goggins said. “The amenities were an important part of our ability to attract the two tenants.”

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