What Office Downturn? Owner Of Iconic Midwest Tower Describes Hunt, Competition To Buy Class-A Buildings
Accesso Partners is a South Florida-based investment firm that owns and manages Class-A office space in fast-growing cities and premier suburbs — currently, 40 properties in 12 states. Despite recent reports of a softening office market, the company is hungry to expand.
Brian Rosen, Accesso’s former managing director for acquisitions, was promoted this month to chief investment officer and has a mandate to go looking for properties.
“Accesso continues to have a large appetite for acquiring high-quality office buildings, and Brian is leading the search to acquire them,” Accesso Managing Partner Ariel Bentata said.
"We're always competing with two or three other groups," Rosen added.
Rosen, who joined Accesso in 2013 from Investcorp International in New York, where he was a partner for 10 years, said his group currently controls about 14M SF worth of office assets.
"We want to basically take our portfolio up to 25M SF in the next six or seven years, and be the top owner in our respective markets," he said.
Accesso, in partnership with an Israeli investment group, owns the tallest building in Minnesota, the 57-story, 1.43M SF IDS Center, which takes up a full city block, and the single-story, 150K SF, Class-A, 7100 Highlands Parkway in suburban Atlanta.
Accesso’s headquarters are in Hallandale Beach, just north of Miami, and the company has offices in Houston, Dallas, Minneapolis and Atlanta. A company offshoot, Accesso Services LLC, provides property management for 8.5M SF nationwide.
"We raise $75M to $125M in funds at a time," primarily from high net worth individuals from Latin America, Rosen said.
Rosen then invests, avoiding competitive big cities like New York and San Francisco to focus on high-growth secondary markets with strong job and population growth, and typically holding assets for three to 10 years. Austin, Raleigh, South Florida and Denver are current attractive markets, he said.
According to JLL's Q2 Office Insight Reports released this month, the office market in South Florida is cooling, with two straight quarters of negative absorption. Class-B properties are bearing the brunt, while news is mixed for Class-A assets.
Over this past quarter, more than 100K SF of Class-A space in Miami was vacated — mostly by small tenants leasing less than 5K SF — but new properties such as Three MiamiCentral, Canal Park Office, Giralda Place-West Tower and Sunset Office Center were managing to find tenants, and in the downtown core, MiamiCentral and Miami Worldcenter are expected to draw strong interest.
JLL has noted a softening of the office market nationwide; in Q1 net absorption totaled just 3.7M SF, "the lowest annualized level since 2010," the company stated. Ten-X Commercial found that deliveries outpaced net absorption for the fifth consecutive quarter. But JLL predicted that near-peak employment and a strong economy would keep occupancies relatively steady for the near future.
"I think in some markets, it's plateauing. I don't know if it's softening," Rosen said. "Growth is starting to flatten out, but in our markets, we're seeing a lot of leasing activity, and new construction is getting absorbed pretty quickly."
Rosen described a bidding war in Austin and said that with a recent prospect in downtown Philadelphia, "We had done our preliminary research before the bid date and thought we had a great shot — we had 21 days' due diligence and 30 days to close. Somebody came in offering $4M more, two days' due diligence, and a non-refundable deposit after two days. They got the deal."
Asked how he negotiates in such a market, Rosen said, "I'm not sure we're getting any really good deals — we're paying for these deals, and relying on our expertise in these markets to help carry us through. It's hard to negotiate a bargain price because this is high-quality office."