Halfway through 2014, it’s clear that office properties in Greater Cincinnati are selling like hotcakes. Multiple assets have changed hands as the recovering market attracts a growing number of institutional investors.
The second half of the year is off to a strong start. As the Cincinnati Business Courier reported last week, Duke Realty Corp. sold six of its office buildings in Greater Cincinnati to Hines Interests L.P. for more than $150 million. The portfolio includes the Towers of Kenwood in Sycamore Township and five buildings in Centre Pointe Office Park in West Chester Township. According to Butler County records, the five buildings in the Centre Pointe Office Park fetched $81.25 million. The 403,000-square-foot Towers of Kenwood office development sold for $69.2 million.
Improving fundamentals appear to be making Cincinnati-area office assets more attractive to investors. Due to limited development and high absorption, vacancies in the Cincinnati area are expected to continue to drop toward pre-recession levels. Average asking rents are also expected to climb to the highest levels since 2010. CBRE Group Inc. reports that office vacancy in Greater Cincinnati declined from 22.3 percent at the end of 2013 to 21.5 percent at the end of the second quarter. During that stretch, asking rents edged up from $18.57 to $18.80 per square foot.
The recent Hines acquisition followed a number of significant first-half deals, including Lone Star Funds’ $38.9 million acquisition of Executive Centre I, II and III in Springdale. And in Norwood, PBY Partners paid $34 million for the 811,670-square-foot, 10-building Central Parke Business Park Portfolio.
Last month, The Cincinnati Enquirer reported that Wessels Construction and Development Co. Inc. sold Gateway Center and Gateway Center West in downtown Covington, Ky., for $82.6 million. ARCP Acquisitions L.L.C., an affiliate of New York City-based American Realty Capital Properties Inc., is the new owner of the office buildings on Scott Boulevard and Madison Avenue, which offer about 440,000 square feet of rentable space between them, According to Wessels officials, the sale may be the largest real estate deal in Northern Kentucky history.
Photo credits: Duke Realty Corp.