Piedmont Office Realty Trust paid a recorded $28 million last week for the HD Supply-anchored office building in downtown Orlando, marking its sixth Class A office investment in the region.
Located at 501 W. Church St., northwest of the Amway Center and commonly known as the "HD Supply" building, Piedmont's newest asset features 195,000 total square feet across five stories. Built in 2003, it is currently the only Class A office space in Orlando's Central Business District west of Interstate 4.
The sale closed on Feb. 22 and was recorded Tuesday in Orange County. Officials with Piedmont did not respond to requests for comment.
Piedmont is a fully-integrated and self-managed REIT specializing in the ownership and management of Class A office buildings.
The company also owns five other Class A buildings in Greater Orlando totaling more than 1.587 million square feet, between the CNL Center I and II and the SunTrust Center in downtown, and the 400 and 500 TownPark buildings in Lake Mary.
This purchase puts Piedmont's holdings in the Central Business District on par with that of market-leading landlord Highwoods Properties (1.7 million SF), but Highwoods retains top position in the market when counting its suburban holdings (2.1 million SF overall), according to data from Cushman & Wakefield.
"I think that price is reflective of the quality of the building and all the factors that go into its marketability," said Jeff Sweeney, senior director for C&W specializing in office, who wasn't involved in the deal. "But I think it's a great statement about Orlando, because anytime you have an institutional buyer like Piedmont continue to place bet after bet on Orlando it's a reflection they have confidence in this market, long-term."
An investment affiliate of Hughes Supply, Inc. bought the property in 2002 and developed the office building. The company is one of the largest industrial distributors in the nation for construction materials and maintenance equipment. It was acquired by Home Depot in 2006, integrated into Home Depot's supply division known as HD Supply, then sold again in 2007 to three private equity firms. The company turned public in 2013.
The seller was Pavilion Orlando LLC, an affiliate of Missouri-based Pavilion Apartments, which bought the property from a Hughes Supply affiliate in 2004 for $24.623 million.
Main tenants of the building include Webster University, Travelclick and HD Supply. The building's on-site amenities include a fitness center, cafe, security and shared conference space.
Webster leases a whole floor of roughly 37,000 square feet, but is currently trying to sublease 15,000 square feet of that at $21 per square foot, divisible into chunks as small as 5,000 square feet.
Darryl Dotherow of Realty Capital Florida is marketing the sublease opportunity. The rate is a value compared to Class A sublease space east of I-4 ranging from $24 to $26 per square foot.
"I think with the new soccer stadium being open two years this HD Supply building has definite growth potential," he said. "We can offer a good parking ratio of three per 1,000. It's unknown how visible the building will be with the future Orlando Magic (Sports Entertainment District)."