By Jon Peterson
A massive state government-occupied office portfolio just hit the market, and its sale will likely test the market’s willingness to take a large group of properties occupied by Washington’s state government. Arlington, Wash.-based Vine Street Group is offering up for sale a portfolio of 24 office buildings totaling 1.35 million square feet with all but one building located in Olympia and Tumwater markets. Pricing guidance on the sale of the portfolio could not be determined at this time.
Vine Street Group has chosen the CBRE Government Investments Properties Group to be the listing agent on the sale. The team leading the marketing efforts includes Brian Saal and Marc Rampulla, both senior vice presidents with the brokerage firm’s office located in Washington, D.C. CBRE did not respond to several phone calls seeking comment for this story.
The portfolio has a total of 19 properties spread across 24 buildings. The largest property in the Olympia group of buildings in the portfolio is the 161,200 square-foot Cherry Street Plaza property located at 626 8th Avenue Southeast. This asset was first developed in 2005 and currently has no vacancies. The largest property in the Tumwater group is a building that goes by the name of Town Center East 3 located at 243 Israel Road Southeast. The 2005 vintage property totals 148,298 square feet and is now fully leased.
The portfolio is roughly 94.5 percent leased, and the largest portion of the property is occupied by the State of Washington for its Department of Enterprise Services, comprising 98 percent of that lease occupancy. All of the properties are located within a place designated by the State of Washington as its preferred leasing area, which should be a benefit for market competitiveness and likely future lease renewals.
Nearly all of the properties in the portfolio were specific build-to-suit facilities for the State of Washington. Currently, 15 of the properties are fully leased to the State. The leases on some of them have been renewed recently for a 10-year term. Overall, the portfolio has a weighted average remaining lease term of 7.3 years with options and limited tenant rollover within the next five years. Around 70 percent of the portfolio is occupied by groups associated with health care and related support, which are among the fastest-growing agencies with the most robust budgets in the state.
Vince Steet Group has been an active investor in making improvements to the portfolio over the past five years. Some of the work on the portfolio has included updating nearly all lobbies, interiors and new roofs and control units in many of the buildings.
Vine Street Group is a Pacific Northwest, family-owned and operated, regional, development and investment building company, according to the company’s website. The company was founded in 1978 and it is primarily focused on owning, operating and leasing buildings to tenants with high credit quality characteristics like government entities.