Going sideways: Office building sells for same price as it did a decade ago

A decade ago, a group of tenant-in-common investors bought 300 Four Falls in West Conshohocken, Pa., for what was an astonishing amount of money for a suburban office building -— $100 million, or $340 a square foot.

At the time, it was a record setting figure on a per-square-foot basis but that was so 2006. The building sold in a transaction that closed Friday for $98.4 million, just shy of what it traded for 10 years ago.

Maguire Hayden, which is based in West Conshohocken, bought the office property in what it called a "strategic" move. It also owns Five Tower Bridge in the submarket.

"We like the market a lot and this was strategic. We wanted to buy something for the long-term," said Tony Hayden Jr. "We feel suburban office properties haven't become the flavor of the month with the institutional guys. They are chasing apartments downtown and industrial properties. If this was an office building downtown, it would have been: Katy, bar the door!"

When the 297,320-square-foot building sold a decade ago, it set a record for the highest price ever paid for a suburban office property in the region.

There are reasons why it didn't exceed that amount this time around. That price was a reflection of where the market was at the time, which was just shy of its peak. The building, one of the marquis properties in that office submarket, was also fully leased.

Since then, the seven-story structure has lost just a bit of its luster. One of its biggest tenants, the Judge Group, will be vacating 37,000 square feet later this year. Built in 2003, the property isn’t old but newer office space, that's also closer to a train station and the hubbub of downtown Conshohocken, Pa., is on the horizon. Many speculate a developer will kick off a new office building later this year.

All of that combined has meant 300 Four Falls' value essentially stagnated.

Regardless, Hayden was still attracted to the property for several reasons. He noted there are tax benefits for tenants who rent space on that side of the Schuylkill River and there are a limited number of areas where new office construction can pop up in West Conshohocken. Even though 300 Four Falls will be losing one of its main tenants, Hayden felt the risk was somewhat mitigated. Judge Group has a total of 20 months remaining on its lease, he said.

Hayden plans to invest in some upgrades to the property such as new lighting among other "high-impact improvements."

An office building across the street at 100 and 200 Four Falls is up for sale and Hayden said the firm was considering making a run at it but hasn't made a decision.

Mike Margolis, Taylor King, Dave Dolan and Brett Segal of Newmark Grubb Knight Frank arranged the sale of 300 Four Falls.

Source: Philadelphia Business Journal