Upcoming Sale of Summerlin Office Properties Offers Promise for Market

By Alex Girda, Associate Editor A big office deal or a series of smaller ones seems likely to take place in the Las Vegas area in the near future. VegasINC magazine recently reported that General Growth Properties is looking to offload a number of the office buildings it holds in Summerlin. The 32 office buildings [...]

A big office deal or a series of smaller ones seems likely to take place in the Las Vegas area in the near future. VegasINC magazine recently reported that General Growth Properties is looking to offload a number of the office buildings it holds in Summerlin. The 32 office buildings the company is currently offering up to buyers total 1.1 million square feet of space, and according to industry professionals, it could end up with $127 million when the last transaction is completed.

According to the magazine, the rumored frontrunner for the Summerlin portfolio is Houston-based industry giant Hines Interests L.P.; Oaktree Capital Management L.P., an international investment firm out of L.A., has also been linked to the assets. With figures such as $115 per square foot and $127 million being thrown around in regards to the imminent deal, but some brokers feel the transaction will amount to slightly less than that.

New ownership could be a breath of fresh air for the still suffering Las Vegas Valley, which could benefit from new efforts to get the spaces up to tenant preferences. Las Vegas’ overall office vacancy rates have hit the 25 percent mark more than once in recent years, coming in high above the national trend, according to Marcus & Millichap figures, and 2012 doesn’t seem to change much in that dynamic.

The deal could rival some other portfolio transactions in terms of sale price, but could set a record in price per square foot in the post-downturn era. According to VegasINC, the only deal to pack such a punch for the Las Vegas market was the sale of a 400,000-square-foot portfolio in the southwestern part of the city back in the mid-2000s, at the absolute height of the market. Those properties traded for a per-square-foot rate of $300, or a total of about $120 million, a figure General Growth Properties is looking to improve upon.

Chart courtesy of Marcus & Millichap Real Estate Investment Services at marcusmillichap.com