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Gladstone Commercial paid $18.5 million last week for this office building on Business Center Drive in Lake Mary.
Gladstone Commercial paid $18.5 million last week for this office building on Business Center Drive in Lake Mary. (Gladstone Commercial)

Gladstone Commercial, a McLean, Virginia-based REIT, purchased a three-story office building on Lake Mary's International Business Center Drive for $18.5 million, according to a deed signed Dec. 27 and recorded Thursday in Seminole County.

The 87,080-square-foot building is 100 percent leased to CentralSquare Technologies through December 2029, according to Brandon Flickinger, Gladstone's managing director for the southeastern United States.

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Flickinger told GrowthSpotter that Gladstone is looking for more investments in the Orlando area. The company likes the area's strong underlying economic foundation, especially the 2.7 percent unemployment rate.

Insight on the real estate investor and developer's plans to build four new office duplexes in the coming year for sale to small businesses.

"That's about a point below the national average," he said. "That supported the Class A office investment because it manifests in an 8 percent vacancy rate."

CentralSquare was formed through a merger of high-tech companies Superion, TriTech and Aptean. The merger was arranged by equity sponsors Bain Capital and Vista Equity Partners, according to a Gladstone press release.

The seller, Starwood Capital Group Globalbought the Lake Mary building in July 2017 for $16 million. Flickinger pointed out that Starwood negotiated a lease extension with CentralSquare and invested approximately $8 million in the property.

Insight from a local developer on why they chose to build a new corporate headquarters in Colonial TownPark.

"We fund our mortgage with fixed-rate debt that allows us to lock in our returns for the 12-year lease period," Flickinger explained. "That's where we receive our value -- at around a cost basis of $212 a square foot, which is well below replacement cost."

It was Gladstone's second acquisition in the Greater Orlando area. In July 2017, Gladstone bought  the Maitland Preserve office park for $51.4 million. The Maitland property consists of 300,000 square feet of office space in three buildings, and is 100 percent leased, Flickinger said.

Gladstone Commercial typically invests in single-tenant and anchored multi-tenant net leased office, industrial and medical properties, in what it considers growing submarkets with strong underlying land value. As of Sept. 30, the company's real estate portfolio consisted of 99 properties in 24 states, totaling 11.6 million square feet.

Have a tip about Central Florida development? Contact us at Newsroom@GrowthSpotter.com or (407) 420-6261. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.

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