The Atrium Multi-Tenant Office Investment Opportunity Home to State Department of Financial Services – Expires 2034
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THE ATRIUM MULTI-TENANT OFFICE INVESTMENT OPPORTUNITY HOME TO STATE DEPARTMENT OF FINANCIAL SERVICES – EXPIRES 2034 323 JOHN KNOX RD TALLAHASSEE FLORIDA THE ATRIUM 323 JOHN KNOX RD, TALLAHASSEE, FLORIDA Property Contacts Jimmy Nystrom, SIOR Kat Butler Director Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 Cell +1 850 570 5837 Cell +1 615 428 7909 Disclaimer: Information included or referred to herein is furnished by third parties and is not guaranteed as to its accuracy or completeness. You understand that all information included or referred to herein is confidential and furnished solely for the purpose of your review in connection with a potential purchase of the subject property(ies), as applicable. Independent estimates of pro forma income and expenses should be developed by you before any decision is made on whether to make any purchase. Summaries of any documents are not intended to be comprehensive or all-inclusive, but rather only outline some of the provisions contained therein and are qualified in their entirety by the actual documents to which they relate. The asset owner(s), their servicers, representatives and/or brokers, including but not limited to NAI TALCOR, CRE WOODCREST LLC, and their respective agents, representatives, affiliates and employees, (i) make no representations or warranties of any kind, express or implied, as to any information or projections relating to the subject asset(s), and hereby disclaim any and all such warranties or representations, and (ii) shall have no liability whatsoever arising from any errors, omissions or discrepancies in the information. Any solicitation for offers to purchase the subject asset(s) is subject to prior placement and withdrawal, cancellation or modification without notice. 2 TALCOR.COM SECTION 1 EXECUTIVE SUMMARY 01 Trousdell Aquatics Center Centre of Tallahassee New State Offices: Department of Health Department of Children & Families Division of Corporations TALCOR.COM 01 EXECUTIVE SUMMARY OVERVIEW NAI TALCOR is pleased to offer this stabilized, multi-tenant office investment. The Atrium is well positioned within the Woodcrest Office Park, centrally located within Tallahassee’s MSA. The building is current 98% occupied with over 55,645 rentable square feet. It is home to the State Department of Financial Services and the State Fire Marshall office, making the Atrium a desirable long-term asset in any investor's portfolio. The building is located adjacent to the newly renovated Centre of Tallahassee which is home to approximately 1,800 state employees within three branches (DOH, DCF and DOE). Amenities in the area include a public aquatic center (Trousdell Aquatic Center seen in the photo across John Knox), an Urban Food Court located in the adjacent mall, various QSR’s and national retailers. Key Investment Highlights 98% Occupied DFS Long Term Lease | Expires 2034 Strong Submarket Below Replacement Cost Ample Area Amenities Excellent Physical Condition Jimmy Nystrom Kat Butler Commercial Real Estate Advisor Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 4 TALCOR.COM Cell +1 850 570 5837 Cell +1 615 428 7909 TALCOR.COM 01 323 JOHN KNOX RD, TALLAHASSEE, FL 32303 55,645 RSF 1989 3 3.20 AC 98.10% 3.4/1,000 RSF Size Year Built Stories Site Area Occupancy Parking THE (as of June 2020) (Surface and Garage) ATRIUM Jimmy Nystrom Kat Butler Commercial Real Estate Advisor Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 5 5 TALCOR.COM Cell +1 850 570 5837 Cell +1 615 428 7909 TALCOR.COM 01 EXECUTIVE SUMMARY MARKET HIGHLIGHTS Tallahassee Office Market The overall Tallahassee office market is currently at a vacancy rate of 6.1% in the second quarter of 2020, well below the national average of 9.7%. The Tallahassee CBD has a mixed-use project in the Cascades Park area which will add an additional 63,980 feet of office space along with a Hotel and Apartments projected to be completed in Q4 2020. In more rural suburban markets, an additional 20,000 square feet will be added by 2021. Over 200,000 square feet of state offices were relocated from the W. Tennessee corridor to the Centre of Tallahassee. The office parks in which these tenants left will likely be redeveloped and repositioned with new ownership in the next three to five years, as they are obsolete office space with little interest from prospective tenants. 6.1% 83,980 SF Vacancy Under Construction in Tallahassee Office Market Tallahassee Office Market Economic Growth As the state capital, Tallahassee maintains a healthy and stable economy with significant footprints in the Government Services, Healthcare, Financial Services, and Hospitality sectors. Additionally, Tallahassee is home to two major universities, Florida State University and Florida A&M University, making Education a major demand driver for the region. Jimmy Nystrom Kat Butler Commercial Real Estate Advisor Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 6 TALCOR.COM Cell +1 850 570 5837 Cell +1 615 428 7909 TALCOR.COM 01 EXECUTIVE SUMMARY LOCATION Jimmy Nystrom Kat Butler Commercial Real Estate Advisor Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 7 TALCOR.COM Cell +1 850 570 5837 Cell +1 615 428 7909 SECTION 2 PROPERTY OVERVIEW 02 TALCOR.COM 02 PROPERTY OVERVIEW PHYSICAL CONDITON The Property has been exceptionally well-maintained over the years with over $1.7 million in capital improvements made in recent years. Bathrooms on 2nd and 3rd floors completed in the last 12 months. Several HVAC units have been replaced in the last 5 years as well. All but one interior space has been updated in the last 24 months. UPGRADES THROUGHOUT THE BUILDING Jimmy Nystrom Kat Butler Commercial Real Estate Advisor Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 9 TALCOR.COM Cell +1 850 570 5837 Cell +1 615 428 7909 TALCOR.COM 02 PROPERTY OVERVIEW SITE PLAN 3.20 AC Jimmy Nystrom Kat Butler Commercial Real Estate Advisor Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 10 10 TALCOR.COM Cell +1 850 570 5837 Cell +1 615 428 7909 TALCOR.COM 02 PROPERTY SUMMARY LOCAL MAP N THE ATRIUM Florida State Capitol Florida State University FL A&M University © 2019 Google Jimmy Nystrom Kat Butler Commercial Real Estate Advisor Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 11 11 TALCOR.COM Cell +1 850 570 5837 Cell +1 615 428 7909 SECTION 1 TALCOR.COM EXECUTIVE SUMMARY 02 RETAIL MAP THE ATRIUM Jimmy Nystrom Kat Butler Commercial Real Estate Advisor Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 12 TALCOR.COM Cell +1 850 570 5837 Cell +1 615 428 7909 SECTION 3 FINANCIAL ANALYSIS 03 TALCOR.COM 03 VALUATION FINANCIAL OVERVIEW TALCOR.COM 03 VALUATION RENT ROLL Notes: • DFS and State Fire Marshall only pay on Useable Square Feet. The total square footage is a blended number with useable and rentable square footage. • All leases are on a full-service basis. Jimmy Nystrom Kat Butler Commercial Real Estate Advisor Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 15 TALCOR.COM Cell +1 850 570 5837 Cell +1 615 428 7909 TALCOR.COM 03 VALUATION EXPENSE SUMMARY Expenses Covered by Woodcrest Association Prorata Share Of Common Area Cost*: • Landscaping • Irrigation • Sidewalks • Roadways Taxes $62,434 • Sweeping Contr. • Street Lighting • Mgmt. Ofc. Exp. Insurance* $24,635 • Directory Sign Maint. *Not a complete list Association Fees** $141,793 Cost for Interior Maint. Based on Budget: • HVAC Filters • Janitorial Operating Expenses*** $193,295 • Trash Removal • Pest Control Gross Expenses $422,157 • Light Bulbs/ • Ballasts Other Operating Expenses *Prorata Share of 2020 Budgeted Insurance (Not Covered by Association) **2020 Budget for Association Estimated to be $2.34/SF ***Estimated Based on 2020 Budget • Building Specific (i.e.) Vendor Repairs (Repairs for HVAC, Plumbing, Electrical, Structure, Etc.) • Painting • Pressure Cleaning • Management Fees • Association Fees • Building Utilities • Other Building Specific Maintenance/Repairs Jimmy Nystrom Kat Butler Commercial Real Estate Advisor Commercial Real Estate Advisor [email protected] [email protected] Office +1 850 224 2300 Office +1 850 224 2300 16 TALCOR.COM Cell +1 850 570 5837 Cell +1 615 428 7909 SECTION 4 MARKET OVERVIEW 04 TALCOR.COM 04 MARKET OVERVIEW OFFICE MARKET OVERVIEW The Property is located in the Suburban Tallahassee submarket, the largest Tallahassee Downtown Office Submarket submarket in terms of inventory and asset value, which consists of Downtown Market CBD Suburban All Classes* approximately 10.6 million square feet. This includes the large number of State of Florida owned and occupied buildings. As of May 2020, the Suburban Overall Vacancy: 12.2% 4.2% 6.1% Tallahassee office submarket had a vacancy rate of 4.2%, compared to the Rental Rate (PSF): $27.37 $19.41 $18.74 overall Tallahassee office market's current vacancy of 6.1%. The Suburban market rent range is between $12.00 and $18.00 PSF, according to market YTD Net Absorption (SF): 34,107 2,744 101,991 experts. Class A rates in the Downtown market range between $26.00 and $35.00 PSF. Total RBA (SF): 2,269,226 10,607,222 23,451,932 There are two Suburban parks where the State of Florida tenants have left Under Construction (SF): 63,980 20,000 83,980 and moved to the Centre of Tallahassee (a repositioned mall), Winewood and Source: Through Q2 2020 CoStar Koger Center.