King of Prussia office building comes up for sale

Equus Capital Partners has put 1000 Continental Drive in King of Prussia, Pa., on the market just six years after it constructed the office building.

The six-story, 205,424-square-foot structure was built on speculation beginning in 2006 when other landlords were also developing new office properties without any tenants lined up because demand had picked up. Built for roughly $42 million at the time, the structure was the last new office property to be constructed in the King of Prussia office submarket.

The building came on the market in the fall of 2007 as the financial world was beginning to unravel. Because the property hit the market when the economy was entering a deep recession, it took some time for 1000 Continental to get leased. Its first tenants — the Hartford and Worldwide Clinical Trials — signed on in fall 2008. It now has 30,000 square feet available for lease and is 84 percent occupied.

The building could sell for roughly $60 million, according to estimates.

“We think interest will come from institutional buyers,” said Jim Vesey, an investment broker with Jones Lang LaSalle. “It’s one of the better buildings in the market, it’s well built with good rents and credit rent roll.”

The building sits in a submarket that suffers from some of the highest vacancy rates in the region. At the end of the second quarter, the vacancy rate was 19.2 percent, according to Newmark Grubb Knight Frank. However, it has achieved rents in the $30s a square foot range and is one of the newest buildings in the market constructed to meet silver LEED criteria.

“The market has a big appetite for high quality assets and I would regard this as a trophy asset,” said Steve Spaeder, senior vice president at Equus Capital. “There’s a very small pool of assets in the Philadelphia suburbs that one would regard as trophies and there’s enormous investor appetite for trophy assets.”

Source: Philadelphia Business Journal