Rockside Road Office Properties Continue to Attract Investment
Properties throughout the Rockside Road Business District are attracting both domestic and international investment. Two Independence office parks have sold over the past few months. In December 2014, Aegon sold Summit Office Park to a group of Canadian investors. The $26.5 million transaction included 525,000 square feet of office space over four buildings. The office park was approximately 70 percent occupied at the time of the sale.
In February 2015, Duke Realty sold the remainder of its Rockside Road portfolio to Time Equities, Inc., a real estate firm based in New York for $20 million. The transaction included the Oak Tree Place and Freedom Square I, II and III buildings in Independence, the Rock Run buildings in Seven Hills and vacant land off Oak Tree Boulevard South. The six buildings comprise more than 350,000 square feet of office space and have an occupancy rate of approximately 67 percent.
The sale of these six buildings and the vacant land mark the end of Duke Realty’s presence in Northeast Ohio. Duke Realty had been trying to sell its Northeast Ohio assets as part of a company strategy to reduce the percentage of Midwest office buildings in its portfolio. In December 2013, Duke Realty sold a five building portfolio in Independence for $62.4 million to Five Mile Capital Partners, LLC., based in Stamford, Connecticut. The sale included nearly 650,000 square feet of office space at Park Center Plaza I, II and III. These office parks are some of the premier Class A office space in the Rockside Road Business District.
Five Mile Capital Partners, LLC has since invested substantially in updates to common spaces and exterior enhancements at the Park Center Plaza and Corporate Plaza office parks. These investments have already started paying dividends for the new owners. During the past year, several new tenants including Graftech, Longbow Research and University Hospitals have signed leases in Park Center Plaza and the IRS has relocated into Corporate Plaza. Occupancies have risen from 81 percent to over 94 percent across both Park Center Plaza and Corporate Plaza.
The new owners of Summit Office Park and Freedom Square have indicated plans to follow a similar strategy as Five Mile Capital Partners, LLC. Both ownership groups are planning to invest in their recently purchased Independence properties. Initial plans include the renovation of lobbies, conference rooms, other common spaces and some possible exterior enhancements. Undoubtedly, these owners are hoping to experience the same increases in occupancy as achieved by Five Mile Capital Partners, LLC.
The investment in these office parks continues a trend of investment in commercial buildings throughout Independence. In 2014, the commercial building permit value was just under $13 million. The majority of the commercial permits were for projects in existing buildings. Investment in existing buildings is critical to maintaining their competitive position in the market and ensuring the long-term viability of the Rockside Road corridor and the City’s other business districts.