Arch Street, Orion Unveil Single-Tenant Office Venture

700 Market Street, St. Louis, Mo. Image courtesy of Arch Street Capital Advisors LLC

Arch Street Capital Advisors and Orion Office REIT Inc. have formed a programmatic venture focusing on the acquisition of long-term leased, single-tenant office assets.

Orion’s interest in the partnership was assumed from VEREIT Inc. (the former American Realty Capital Properties Inc.) as part of Orion’s spin-off transaction following the merger of Realty Income Corp. and VEREIT. To date, the partnership has acquired six assets for approximately $227 million.

The partnership recently acquired 700 Market St. in St. Louis, a 127,468-square-foot office property in the city’s central business district, adjacent to the new $360 million Ballpark Village and just one block from Busch Stadium.

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700 Market St. is occupied under a long-term lease as the corporate headquarters of Spire Inc., a public utility holding company that provides natural gas in Missouri, Alabama and Mississippi. Spire’s predecessor company Laclede Gas Co. was at one time the eighth-oldest listed stock on the New York Stock Exchange and was also one of the original 12 companies in the Dow Jones Industrial Average.

In a prepared statement, Gary Landriau, chief investment officer and executive vice president at Orion, noted that the previous owners of 700 Market St. had made substantial investments “to transform what was a striking building into a fully functional and modern corporate headquarters that remains on the National Register of Historic Places and that our tenant will occupy for many years.”

“The combination of the real estate and the long lease with a credit tenant makes this an attractive asset for the partnership,” he added.

The venture is actively seeking new single-tenant office investment opportunities in the range of $10 million to $60 million.

As of press time, Arch Street had not replied to Commercial Property Executive’s request for additional information.

Omicron’s obstacle

As the St. Louis office market hit year-end, Omicron was postponing many companies’ back-to-office plans, according to a fourth-quarter report from JLL. 2021 nonetheless saw both lease and sale transactions increase, with total vacancy stable at 16 percent.

In the downtown submarket, annual net absorption of Class A space was 1.9 percent of the 6.5 million square feet of inventory. Total vacancy was 19.9 percent, again according to JLL.