Steelbridge sells downtown Orlando office building
One of downtown’s biggest towers — featuring noted law firm Orlando-based Morgan & Morgan PA as its anchor tenant — is nearing a sale to a Miami company, despite the challenges the office real estate sector has faced during the Covid-19 pandemic.
Banyan Street Capital is under contract to buy 20 N. Orange Ave. for roughly $63 million, or about $225 per square foot, Orlando Business Journal has learned.
The seller is Steelbridge 20 North LLC, whose principals include Evanston, Illinois-based Steelbridge Capital and New York-based Apollo Global Management Inc. (NYSE: APO). Chicago-based Cushman & Wakefield (NYSE: CWK) was marketing the building for sale. Representatives with Steelbridge 20 North LLC, Cushman & Wakefield and Banyan Street Capital weren’t available for comment.
The Backstory
The 16-story tower hit the market last fall, despite the fact that many companies were downsizing or walking away from their offices altogether as people worked from home during the pandemic. At the time, the 279,780-square-foot building was 87% leased with the global headquarters of Morgan & Morgan occupying 92,939 square feet of space through March 2029 — making the law firm one of the largest office tenants in downtown Orlando. The high-rise, which was built in 1983, sits on 2.32 acres, according to Orange County records. The property’s market value was $41.3 million in 2020, according to the Orange County Property Appraiser. It previously sold for $34.8 million in July 2015. Meanwhile, Steelbridge itself has invested $5.3 million in upgrades, which included renovating the building’s retail
Office issues
That said, the local office market faces uncertainty as a surge in office employees working from home during the pandemic have lessened demand for space. A record amount of available sublease space has hit the Orlando market, according to research by Brian Alford, CoStar Group’s (Nasdaq: CSGP) director of market analytics for Central and West Florida. Roughly 1.63 million square feet of Orlando office space is available for sublease — the highest CoStar has tracked since mid-1999. Still, some investors are bullish on office space making a major comeback despite the current headwinds. For example, the roughly 70,000-square-foot building at 8301 Southpark Circle sold on May 4 for $16 million, or $228 per square foot. Office stats downtown Orlando’s central business district — the downtown office submarket — had a 16.42% average office vacancy rate, compared with metro Orlando’s overall average of 13%, Chicago-based Cushman & Wakefield PLC’s (NYSE: CWK) first-quarter market report showed. Meanwhile, the submarket’s monthly asking rent for Class A office averaged $29.60 per square foot, compared with the Orlando-area’s $27.80 per square footstorefronts, lobby areas, elevators and common areas.