Bethesda Investor Sells Pennsylvania Industrial Site in $35M Deal
By Keith Loria April 8, 2022 3:04 pm
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Bethesda, Md.-based 1788 Holdings has sold Riverside Business Center, a single-story industrial building in Whitehall, Pa., north of Allentown, for $34.7 million.
The investor acquired the 423,900-square-foot asset, located at 1139 Lehigh Avenue, for $11.7 million in 2018. The asset includes both manufacturing and warehousing space, which 1788 Holdings took from 87 percent to full occupancy during its ownership, the company boasts.
Since purchasing the asset, the demand for industrial assets has drastically increased, changing 1788 Holdings’ plan in the process.
“We acquired Riverside Business Center in 2018 at just over $27 per square foot — a price less than 30 percent of the property’s replacement cost, with the intent to hold for 10 years,” Larry J. Goodwin, principal of 1788 Holdings, told Commercial Observer. “These plans changed when we detected the compression of capitalization rates for building in our peer group in the Lehigh Valley region, with rates declining from around 7 percent to the mid-4 percent range.”
So, 1788 Holdings hired CBRE (CBRE) to explore the possibility of a sale and generated 10 offers, including the winning bid from Buligo Capital Partners.
Built in 1910, Riverside Business Center has undergone multiple renovations such as a 2006 investment of more than $9 million to transform the property from a single-user manufacturing facility to a multi-tenanted warehouse and light manufacturing building, per a 1788 Holdings statement.
During its four-year hold period, 1788 Holdings undertook various efforts for value enhancement. Strategies included physical plant upgrades and the rehabilitation of an abandoned second floor, according to the statement.
During its 2018 acquisition, Goodwin noted the property afforded an opportunity to recreate the asset’s entire work environment in the opinion of its lessees and the market.
“It also gave us the opportunity to really create intensely personal relationships with the lessees — one where both sides of the lessor-lessee relationship were working together to create a much-improved environment and that in turn really created tight bonds between the parties,” he said. “We were the owners that were fortunate enough to get to live that transformation in all of its facets.”
Michael Hines of CBRE represented the seller in the deal. The identity of the buyer’s representative was not immediately clear.
Requests for comment from the buyer and CBRE were not immediately returned.
Update: This story originally misattributed source material. This has been corrected. We apologize for the error.
Keith Loria can be reached at Kloria@commercialobserver.com.
