Two months after the COVID-19 pandemic placed nearly all industries on hold, many financial markets are slowly restarting. In particular, several major office deals took place in May, proving that the situation in commercial real estate is starting to thaw. Here are the six most significant office deals and leases that took place this month.
1. LA’s City National Plaza Receives $550M CMBS Refi
As one of the first commercial mortage-backed securities (CMBS) transactions since the COVID-19 outbreak began in the U.S., the $550 million refinancing transaction of City National Plaza is one of the first signs of a return to normal. The LEED Platinum-rated, 2.5-million-square-foot, mixed-use and office complex in downtown Los Angeles is a joint venture between CommonWealth Partners and CalPERS, the California Public Employees’ Retirement System. The property features 2.4 million square feet of prime LA office space, complete with 123,375 square feet of retail space and 3,240 parking spaces. It’s also 81.4% leased, with City National Bank, Federal Insurance Co. and M. Arthur Gensler Jr. & Associates being the largest tenants.
The $550 million deal is comprised of a $330 million senior A note CMBS single-asset, single-borrower transaction, as well as a $50 million A note securitized as GSMS 2020-GC47. The remaining notes are expected to be part of future CMBS transactions. With a 2.44% fixed rate, the 10-year, non-recluse loan requires monthly, interest-only payments.
2. Chopp Holdings Purchases 207K SF Class A Space in Delaware Office Deal
Chopp Holdings has made its first deal in the state of Delaware with the purchase of the property located at 824 N. Market St. in downtown Wilmington, Del. With several buyers lining up to acquire the Class A building, CBRE selected Chopp Holdings as the new proprietor, because the company managed to perform well, despite harsh market conditions inflicted by the global pandemic.
The 10-story office building lies just across from Wilmington’s U.S. Courthouse and was 67% occupied at the time of the sale. Of the existing occupancy, 62% is made up of General Services Administration tenants. Santander Bank, Brew HaHa! and Jimmy John’s are other prominent lessees.
3. Newmark Knight Frank Brokers $39M Sale of Commerce Plaza
The two-building, 194,908-square-foot office property located in Commerce, Calif., was recently sold for $39 million. Newmark Knight Frank facilitated the sale of the buildings, which lie at the junction of 5601 E. Slauson Ave. and 5701 S. Eastern Ave. on eight acres of an opportunity zone. Its strategic location is just across the street from Commerce Office Park, eight miles southeast of Downtown Los Angeles and roughly one mile south of the Commerce city center.
The Class B office campus was leased to 13 companies when buyer Omninet Capital purchased the property. It’s expected to reach a 100% occupancy rate, as the County of Los Angeles has plans for a 51,555-square-foot lease extension.
4. CBRE Appoints Co-Sublease Agent for 55 Corporate Drive in Bridgewater, N.J.
The CBRE team is set to spearhead the leasing campaign for the 674,000 square-feet of headquarters-quality office space located at 55 Corporate Drive in Bridgewater, N.J. The three-building office complex sits upon 149 landscaped acres in a highly sought-after location within New Jersey’s prestigious triangle of routes 287, 78 and 24. The area is recognized as one of the most dynamic suburban office markets in the tri-state region, and is also home to a large number of corporate headquarters facilities.
On top of its prime location, the property also enjoys excellent amenities and trophy-quality furnishings, making it an appealing offer for office tenants looking to relocate to the area. Some of the building’s finest assets include a state-of-the-art fitness center, an auditorium, an in-house café, conference facilities and several scenic walking trails within reach.
5. Axiom Space Signs 31.3K SF Clear Lake, Calif. Office Lease
The Houston start-up’s lease of 1290 Hercules Ave. is the largest leasing deal in the Clear Lake submarket since COVID-19 hit. The two-story Hercules II Class A office building lies close to I-45 and features a total of 65,200 square feet of office space. Axiom Space is its first occupant, leasing an entire floor that makes up 52% of the building’s total space, which recently underwent a complete renovation.
The property is situated less than a mile away from the Johnson Space Center and less than 10 miles from the Houston Spaceport. This is ideal for Axiom, as the company landed a major contract with NASA earlier in the year to build and attach commercial modules to the International Space Station. As a result, the startup has announced significant expansion plans and has been on the lookout for a temporary office space.
6. Hines Interest LP Buys 49.5% Stake in One Madison Ave.
Hines made waves last month when it announced the purchase of a 49.5% stake in One Madison Ave., a $2.3 billion, adaptive reuse redevelopment in Midtown Manhattan. Hines cooperated with the National Pension Service of Korea to buy the stake from SL Green Corp., the company overseeing One Madison Ave.’s redevelopment. The property will add 1.5 million square feet of space to Manhattan’s commercial real estate market, which will likely be highly valued, thanks to its prime location in the heart of Manhattan and its easy access to NYC’s transportation system. One Madison Ave. is scheduled to be fully redeveloped by 2024.
Hines and SL Green Corp. are also collaborating on the development of One Vanderbilt, a supertall office tower which is currently under construction in Midtown Manhattan. Upon completion, the building will span 1.4 million square feet.