Workspace Pays $170M for 1 MSF Suburban Office Portfolio

6440 Aviation Way, West Chester, Ohio

Workspace Property Trust has acquired an additional 1 million square feet of suburban office space spread across six assets in five markets from Griffin Realty Trust for $170.4 million.

The transaction, combined with an August blockbuster deal for about 8 million square feet of suburban office space in 53 Class A buildings on 41 properties, increases the company’s acquisition of GRT assets to more than 9 million square feet valued at $1.3 billion.

The six buildings are located in suburban Chicago; Dallas; Cincinnati; San Jose, Calif., and Greensboro, N.C., markets. When combined with the existing Workspace portfolio, the new acquisitions increase the size of the Boca Raton, Fla.,-based company’s holdings to 19 million square feet of suburban office, light industrial, R&D and flex space with more than 200 buildings in 23 major metropolitan markets in the U.S. The company now owns and operates suburban office buildings in 14 of the top U.S. metros including Atlanta, Philadelphia, Dallas, Chicago, Phoenix, Houston, Seattle, Silicon Valley and South Florida.

GRT, an El Segundo, Calif.,-based office and industrial REIT, will retain a minority ownership in the entire portfolio sold to Workspace.

Jordan Bock, founder of real estate investment firm Mason Capital, served as strategic advisor and partner to Workspace and the consortium in connection with the transaction. Bock will continue to serve on the Workspace board.

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UBS provided the debt financing and Newmark Group served as advisor to Workspace on the debt financing. Newmark’s Dustin Stolly, Jordan Roeschlaub, Christopher Kramer, Nick Scribani and Benjamin Kroll arranged the loan, according to the Commercial Observer.

Seyfarth Shaw LLP and McCausland Keen + Buckman served as legal counsel to Workspace.

Office market evolution

The properties acquired in the latest deal with GRT are: 6380 and 6440 Aviation Way, West Chester, Ohio, 409,798 square feet; 3929 West John Carpenter Freeway, Irving, Texas, 125,422 square feet; 350 East Plumeria Drive, San Jose, Calif., 142,700 square feet; 7628 Thorndike Road, Greensboro, N.C., 100,733 square feet; and Three Overlook Point in Lincolnshire, Ill, 288,257 square feet.

Thomas Rizk, co-founder, chairman & CEO of Workspace, said in a prepared statement investing in the suburban office markets has evolved quickly from a contrarian play into a sought-after, mainstream and competitive sector as the suburbs continue to perform well. Rizk said suburban markets are experiencing robust leasing activity fueled by strong demand from larger, national tenants to increase their footprint outside of central business districts. He said the company sees compelling growth opportunities within its existing footprint and in select growth markets.

Roger Thomas, co-founder, president & COO of Workspace, said in prepared remarks millions of Americans prefer to work closer to home post-pandemic and are seeking shorter commutes, more affordable housing and better schools along with the benefits of fully amenitized and flexible offices. Thomas said they will continue to invest in their properties, tenant relationships, brand and new innovations to deliver the highest quality experience to tenants and their employees.