Something rare: Office building in Radnor put up for sale

GMCS Editorial:  An article worth reading if you are interested in the square foot sales price of commercial products hitting the marketplace. 

An office building in Radnor, Pa., has come on the market and some in the commercial real estate community predict the property has the potential to set a new high water mark for the sale of a suburban office building.

Equus Capital Partners is seeking to sell Radnor Court, a three-story, 121,371-square-foot building at 259 N. Radnor Chester Road. It is fully leased on a long-term basis to two tenants: Jefferson Health System, which occupies 18,088 square feet; and Airgas Corp., which makes its headquarters in the building and takes up 63,955 square feet. The building was constructed in 1985 and rents run about $35 a square foot.

Doug Rodio, an investment broker with Jones Lang LaSalle, is marketing the property for sale.

Office properties are seldom put up for sale in Radnor and, because of that, the sale of Radnor Court is considered a once-in-a-lifetime opportunity for an investor.

Brandywine Realty Trust dominates the Radnor office market and owns 10 buildings totaling more than 1.5 million square feet of the 1.9-million-square-foot market. Since Radnor is one of Brandywine’s core markets, the company holds onto its properties there. The real estate investment trust may even seek to lock in this building to further solidify its position of power in Radnor.

One of the few office properties to hit the Radnor market was 240 Radnor Chester Road. Last August, Keystone Property Group sold that 100,462-square-foot building for $26 million, or $260 a square foot. Keystone had acquired the building in 2005 for $11 million.

Rodio and other commercial real estate observers predict Radnor Court will set a record on per-square-foot pricing for office sales in the Philadelphia suburbs. Several factors are in play that could help make that happen.

Radnor is one of the premier office markets in the region and considered one of the top performing suburban office markets in the country. The Radnor office market is extremely tight, which is pushing up rents. It has an occupancy rate of roughly 98 percent and tenants who either want to move in or even want to expand have very few options. Lastly, office properties in Radnor seldom come up for sale and that also makes it a highly desirable building to own.

One estimate has Radnor Court trading at more than $400 a square foot, which would shatter a 2012 record made when LaSalle Investment Management bought a medical office building at Ellis Preserve in Newtown Square, Pa., for $50.5 million, or roughly $388 a square foot. That turned out to be the highest price ever paid for a suburban office property in the Philadelphia region. The sale blew out an earlier record set in 2005 when 300 Four Falls, a 290,000-square-foot office property in West Conshohocken, Pa., traded for $100 million, or $340 a square foot.

Coincidentally, Equus was the seller of the property at Ellis Preserve and 300 Four Falls that set the two sale price records.

Source: Philadelphia Business Journal