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New York Life Insurance Co. has purchased a Class-A office building in Palm Beach Gardens, Florida, for $71.8M.
Private equity firm KBS sold the property, Financial Center at the Gardens, it announced Tuesday. KBS bought the asset in 2015 in a joint venture with a partner for $63M.
The building is 10 stories tall and has 189K SF of rentable space. It sits within walking distance to the Gardens Mall and is adjacent to Downtown at the Gardens.
The sale points to optimism in Palm Beach County's real estate market. According to Colliers International's Q2 market report, the county's office sector is healthy, with new construction activity, an unchanged vacancy rate and steadily increasing rental rates.
"The vacancy rate stands still quarter-over-quarter at 10% despite a negative 40K SF of absorption," the report says. "Class-A gross rental rates are ... up 5.9% since the second quarter of 2018. As a whole, gross rental rates for the Palm Beach office market increased 3.5% year-over-year and stand at $30.93 per square foot."
The largest sale of Q2 was the $38M sale of the 140K SF Emerald View at Vista Center located in the West Palm Beach submarket.
KBS spent more than $1M to renovate Financial Center at the Gardens, including adding a main lobby renovation with a new lounge and wine bar as well as upgrades to the café, restrooms, corridors and elevators.
“Targeting growing cities, such as Palm Beach Gardens is an explicit part of our investment strategy,” said Allen Aldridge, senior vice president for KBS and asset manager of the property. “Palm Beach Gardens has proven to be a developing market with positive real estate dynamics which has made it easy to keep the building nearly 100% leased.”
KBS, both on its own and through its many non-traded REITs, is one of the world's largest owners of office properties. It continues to be active despite the unexpected death of its co-founder and former chairman, Peter Bren, in April.
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