TerraCap Management continues to invest in Orlando’s Airport/Lake Nona submarket.
The company just paid $24 million for the 196,000-square-foot Orlando International Business Center on the southwest corner of Hoffner Avenue and Semoran Boulevard (S.R. 436). The portfolio of parcels contain six single-story office/flex buildings.
The seller is an entity tied to Real Capital Solutions based out of Louisville, Colorado. Records show RCS purchased the business center in 2015 for $11.69 million — meaning the asset nearly doubled in value over the past five years.
Orlando International Business Center was 88% occupied at the time of the sale. The seller was represented by Ron Rogg of CBRE Orlando.
Rogg told GrowthSpotter the business center was filled with a mix of long-term tenants in fields of government, medicine and law, among others.
In a COVID economy, many of the single-story office/flex properties have really garnered interest from Investors, he said. The reason being, he adds, is because a single-story office campus can offer tenants more flexibility to expand or contract, and it also gives a tenant more control over their operating expenses, as oppose to a high-rise office building.
“They can control their own security, operating hours or A/C control systems,” he said. “In this environment, all those things make sense for an investor.”
Orlando International Business Center has access to State Roads 528 and 417, and is located less than five miles from Orlando International Airport.
This is the company’s second major acquisition in the area. Last year, it paid $17.6 million Lake Point Business Center, a six-building, fully-leased flex business campus at 6200-6360 Hazeltine National Drive that spans about 134,400 square feet.
Stephen Good, a director at TerraCap, at the time told GrowthSpotter the investment deviates from its typical strategy, which usually involves buying value-add commercial properties that the company can quickly turn around for a profit.
“This is a little different. It’s a longer-term investment” Good said. “The idea behind it is the growth story behind the airport.”
Construction at OIA’s south terminal is still ongoing, despite how the coronavirus pandemic has slashed traffic at the airport. The project is currently expected to cost $2.7 billion, which is a reduction from its previous $3 billion budget, according to the Orlando Sentinel.
The expansion and Lake Nona’s growth just south of the airport has fueled investor interest in the area.
According to a third quarter industrial market report from Cushman & Wakefield, there is more than 19.7 million square feet of industrial properties in Orlando’s Airport/Lake Nona submarket, across 172 buildings, and about 660,000 square feet currently under construction.
The average overall rental rate came down to about $6.15 per square foot, and the overall vacancy rate was 10.9%.