While New York City office owners live in fear of an estimated 44 percent drop in value, landlords in Baltimore just witnessed a further, faster fall.
An affiliate of Virginia-based American Real Estate Partners sold a downtown office building at One South Street for $24 million, the Baltimore Business Journal reported. New York-based BHN Associates picked up the property, its first in the city.
The deal for the 30-story, 475,000-square-foot property works out to roughly $52 per square foot. If that isn’t hard for American Real Estate Partners to swallow, this is: It paid $66 million for the same asset a mere eight years ago, selling for nearly 64 percent below what it once ponied up.
For BHN, this is an opportunity to buy very low on a luxury, Class A office tower, hoping it can turn the property’s fortunes around.
The transaction was a short sale, meaning BHN paid less than the outstanding mortgage on the property. The senior director at the firm, Mordy Wider, said it would’ve been even more expensive to refinance the property, especially in light of higher interest rates.
“Now is the time,” Wider told the publication of his firm’s deal. “Now is the chance to move in.”
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The property is not without its warts, which likely contributed to the discounted price. Alex. Brown & Sons was long the anchor tenant of the property, which was completed in 1992. After a merger and a sale to Deutsche Bank, however, the anchor vacated the space more than a decade ago.
Brokerage Stifel, Nicolaus & Co. is the anchor tenant today, occupying 76,000 square feet. BHN is already working on drumming up more business for the downtown landmark. A broker for the property said three local law firms are touring vacant space in the building, considering leases of up to 30,000 square feet each.
— Holden Walter-Warner