A portfolio of two Class A office buildings has traded hands for $212 million, notching one of Long Island’s biggest office deals of the past decade.
The Birch Group scooped up 1 and 2 Jericho Plaza from DRA Advisors and Onyx Equities. The 665,592-square-foot portfolio adds to the $1.1 billion of commercial office assets the firm has acquired since 2020.
The buildings are 95 percent leased to tenants including AIG, Deloitte, Morgan Stanely, Ernst & Young, Valley Bank, Sterling National Bank and UBS.
The purchase indicates the Birch Group is betting on suburban offices, despite recent surges in new coronavirus cases creating more questions about the widespread return to in-person work.
“The Birch Group is following the demographic shift to the suburbs resulting from the pandemic as leasing activity increases in targeted submarkets,” Christopher DeLorenzo, executive vice president at The Birch Group, said in a statement. “With 2022 return to office plans coming to fruition, this trend represents an extraordinary opportunity to meet the demand for high-quality office assets in prime markets.”
Last year, the Birch Group similarly made a $255 million acquisition of a four-building portfolio in Short Hills, New Jersey. Birch Group CEO and founder Mark Meisner said at the time the company saw the acquisition as a repositioning opportunity.
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Many office workers have migrated to the suburbs during the pandemic, however, office vacancy in the tristate area has remained high.
At the end of September 2021, the vacancy rate for workspace in the suburbs rose to a record-high 26.5 percent, according to data from JLL. That period marked the third consecutive quarter that the share of empty suburban office space finished at an all-time high.
However, hope remains high for the suburbs. A poll of over 500 CRE stakeholders found that nearly half of respondents believe suburban areas of primary markets and secondary markets are best suited for commercial real estate acquisitions.