COMMERCIAL REAL ESTATE – DEALS OF THE YEAR 2007

INDUSTRIAL SALE

The construction and sale of West Park II in Hampton was a logical move. That’s because West Park I and West Park III were already in existence.

“If you look at it, it’s kind of in the middle,” said J. Scott Adams of CB Richard Ellis, joking about why the second was the last built.

At 180,000 square feet, West Park II, which sold for $10.5 million in August to Boston-based High Street Equity Advisors LLC, completes the warehouse trio, bringing the total space to 700,000 square feet.

The first two warehouses were originally occupied by Gateway Computers, which has since vacated Hampton Roads but still has leases on West Park I and III.

“Gateway still pays rent on a lot of space,” Adams said.

All three warehouses remain unoccupied, said Adams, who represented the seller in the West Park II deal and has now had a hand in all three West Park deals. Frank Fallon from CBRE’s Atlanta office and Ashton Williamson also worked with Adams on the deal.

The land for West Park II was purchased by Atlanta-based Taurus, which built the third warehouse on a speculative basis. Gateway subleased its space to NYK Logistics until NYK moved last year. High Street, like Gateway, is waiting for a tenant to fill the Class A space which it paid $58 per square foot.

“They think it’s worth a lot more once there are tenants,” Adams said.

Considering the vacancies at the other two warehouses and the fact that High Street didn’t have a tenant lined up, Adams said negotiations on West Park II moved quickly because it made sense for High Street to own all three properties.

Asked if the industrial real estate market has been feeling the pains like other sectors, Adams said this deal is representative of the current state of industrial space.

“There is quite a bit of industrial development that’s begun or planned,” Adams said. “This transaction is symbolic of other future transactions where developers get control of industrial sites and are willing to sell the building rather than wait for the lease up.”