The newly sold Atrium office building in Boca Raton is in good shape at 90 percent occupancy, including the regional headquarters of discount department stores Marshalls and TJ Maxx. Yet there’s room for growth.
“There’s substantial upside in the rent. There’s vacancy … so there’s still quite a bit of meat on the bone,” said Douglas Mandel, who was part of the Marcus & Millichap sales team.
Alchemy Properties, a New York-based real estate developer and investor, bought the building at 6111 NW Broken Sound Parkway from ICM Realty Group Ltd., a Canadian real estate investor, for $22.4 million Nov. 8.
Mandel along with Marcus & Millichap investment sales associate Tyler Kuhlman, both in Fort Lauderdale, brokered the deal for the seller.
Atrium has 93,260 square feet of rentable office space in the 700-acre Park at Broken Sound. It was originally an industrial area meant to support long-departed IBM operations but is now growing as a suburban live-work-play area.
“While there’s still quite a bit of office, there’s really no light industrial anymore. Now you’ve got residential uses. You’ve got commercial uses like retail. They’ve just built a brand new Fresh Market-anchored shopping center. Office Depot is there,” Mandel said. “You’ve now got this really dynamic neighborhood that just came into existence because of the zoning restrictions that were lifted.”
Park at Broken Sound, previously The Arvida Park of Commerce, is west of Interstate 95 between Clint Moore and Yamato roads.
As a value-add investor, ICM made building improvements that pushed up rents after buying it for $17.05 million in January 2016, said Mandel, who brokered that deal as well.
The seller made a 31 percent gain in under three years.
“When they bought the building, I want to say 25 percent of the space had never been built out, so they came in and did turnkey build-out. They were able to improve the rental income, move some tenants around, increase the income substantially,” Mandel said.
Some of the upside was due to an improving market and nearby purchases by investor Crocker Partners LLC.
“Our thesis in bringing this to market and the reason Alchemy bought in is they are looking at a lot of these rents and seeing there’s a lot of upside for growth for the tenancy,” Mandel said.
Alchemy plans to add amenities such as a gym and cafe that would help push up rents from the current of about $17 per square foot, according to Mandel.
Also, the 10.5-acre Atrium site offers room for a hotel or another office building, he said. No plans have been submitted to the city.
“There is some additional value-add that the new buyer might tap into,” Mandel said.