Sales  ·  Commercial

Bethesda Investor Sells Pennsylvania Industrial Site in $35M Deal

reprints


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.

SEE ALSO: Sam Chang Sells Long Island City Hotel for $40M

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.

Constructed in 1910, Riverside Business Center has been improved and renovated on numerous occasions, including the investment of more than $9 million by the previous owner in 2006 to convert the property from a single-user manufacturing facility to a multi-tenanted warehouse and light manufacturing facility. That renovation included the installation of 31 dock doors and 23 drive-in doors, plus a complete exterior brick and concrete makeover and parking lot upgrades.

1788 Holdings implemented its own value enhancement strategies during its four-year hold period, including making physical plant upgrades, rehabilitating an abandoned second floor of the office structure to allow the recapture of 13,000 square feet of office space, adding wayfinding signage, and creating fenced-in outside storage areas for tenants.

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.

Keith Loria can be reached at Kloria@commercialobserver.com.