FOR SALE WELLINGTON CORPORATE CENTER III 1400 CORPORATE CENTER WAY Wellington, FL 33414
AFFILIATED BUSINESS DISCLOSURE AND CONFIDENTIALITY AGREEMENT CBRE, Inc. operates within a global family of companies with many subsidiaries and related entities (each an Affi liate ) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affi liates, including CBRE Global Investors, Inc. or Trammell Crow Company, may have or represent clients who have competing interests in the same transaction. For example, Affi liates or their clients may have or express an interest in the property described in this Memorandum (the Property ), and may be the successful bidder for the Property. Your receipt of this Memorandum constitutes your acknowledgement of that possibility and your agreement that neither CBRE, Inc. nor any Affi liate has an obligation to disclose to you such Affi liates interest or involvement in the sale or purchase of the Property. In all instances, however, CBRE, Inc. and its Affi liates will act in the best interest of their respective client(s), at arms length, not in concert, or in a manner detrimental to any third party. CBRE, Inc. and its Affi liates will conduct their respective businesses in a manner consistent with the law and all fi duciary duties owed to their respective client(s). Your receipt of this Memorandum constitutes your acknowledgement that (i) it is a confi dential Memorandum solely for your limited use and benefi t in determining whether you desire to express further interest in the acquisition of the Property, (ii) you will hold it in the strictest confi dence, (iii) you will not disclose it or its contents to any third party without the prior written authorization of the owner of the Property ( Owner ) or CBRE, Inc., and (iv) you will not use any part of this Memorandum in any manner detrimental to the Owner or CBRE, Inc. If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return it to CBRE, Inc. This Memorandum contains select information pertaining to the Property and the Owner, and does not purport to be all-inclusive or contain all or part of the information which prospective investors may require to evaluate a purchase of the Property. The information contained in this Memorandum has been obtained from sources believed to be reliable, but has not been verifi ed for accuracy, completeness, or fi tness for any particular purpose. All information is presented as is without representation or warranty of any kind. Such information includes estimates based on forward-looking assumptions relating to the general economy, market conditions, competition and other factors which are subject to uncertainty and may not represent the current or future performance of the Property. All references to acreages, square footages, and other measurements are approximations. This Memorandum describes certain documents, including leases and other materials, in summary form. These summaries may not be complete nor accurate descriptions of the full agreements referenced. Additional information and an opportunity to inspect the Property may be made available to qualifi ed prospective purchasers. You are advised to independently verify the accuracy and completeness of all summaries and information contained herein, to consult with independent legal and fi nancial advisors, and carefully investigate the economics of this transaction and Property s suitability for your needs. ANY RELIANCE ON THE CONTENT OF THIS MEMORANDUM IS SOLELY AT YOUR OWN RISK. The Owner expressly reserves the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions at any time with or without notice to you. All offers, counteroffers, and negotiations shall be non-binding and neither CBRE, Inc. nor the Owner shall have any legal commitment or obligation except as set forth in a fully executed, defi nitive purchase and sale agreement delivered by the Owner. 2017 CBRE, Inc. All Rights Reserved.
WELLINGTON CORPORATE CENTER III CONTACT US KEVIN MCCARTHY First Vice President +1 561 227 1808 kevin.h.mccarthy@cbre.com CBRE, Inc. Licensed Real Estate Broker KEVIN PROBEL First Vice President +1 561 847 8603 kevin.probel@cbre.com CBRE, Inc. Licensed Real Estate Broker TABLE OF CONTENTS 04 EXECUTIVE SUMMARY 08 PROPERTY DISCUSSION 10 AREA OVERVIEW 12 LOCAL MARKET OVERVIEW
EXECUTIVE SUMMARY
WELLINGTON CORPORATE CENTER III THE OFFERING Wellington Corporate Center III is a 2 story offi ce building located in the heart of Wellington, Florida. At over 17,000 square feet, the building contains high end fi nishes as it is the former headquarters of a Fortune 500 company. The building was constructed in 1994 and sits on a nearly 1.5 acre lot. ASSET PROFILE Address 1400 Corporate Center Way City / State / Zip Wellington / FL / 33414 Site Size 1.41 AC SF 17,753 SF Wellington Corporate Center III boasts a fl oorplan that is easily divisible for multiple tenants, a full back up generator, and canopy covered parking. The property is located among high-end residential communities and benefi ts from close proximity to numerous retail amenities. No. Buildings 1 Building Class B Constructed 1994 Parking Ratio 5/1,000 SF % Occupied 0% EXECUTIVE SUMMARY 5
PROPERTY HIGHLIGHTS + +/- 17,753 2-story stand-alone building in prestigious Wellington Florida + Asking price $3,550,000 + Former corporate HQ with high end fi nishes + Perfect for an owner occupier + Designed in 4 sections for easy conversion to multi-tenant + Full back up generator + Canopy covered parking + Abundant retail amenities in the immediate area + Close proximity to high-end residential communities 100% Vacant Building Asking Price $3,550,000 Former Corporate HQ 6
WELLINGTON CORPORATE CENTER III LOCATION MAP Florida Turnpike ATLANTIC OCEAN DOWNTOWN WEST PALM BEACH WELLINGTON CORPORATE CENTER III PALM BEACH INT L AIRPORT VILLAGE OF WELLINGTON
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SECOND FLOOR WELLINGTON CORPORATE CENTER III
AREA DEMOGRAPHICS INCREASING POPULATION ABOVE AVERAGE POPULATION GROWTH RATE 2022 POPULATION BY YEAR % ANNUAL POPULATION GROWTH 1.50 1.25 2017 2010 1.00 0.75 0.50 0.25 Study Area US 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 0.00 2010-2017 2017-2022 EMPLOYMENT EMPLOYMENT 40,432 EMPLOYEES 3,888 BUSINESSES 5.6% RESIDENTIAL UNEMPLOYMENT RATE 10
WELLINGTON CORPORATE CENTER III INCREASING INCOME 1 MILE 3 MILES 5 MILES Average Household Income within 5 mile Radius of Property = $105,068 in 2017
MARKET OVERVIEW Lease rates increase 13% year-over-year According to the U.S. Bureau of Economic Analysis, Florida ranked third in the country in personal income growth, with a growth rate of 4.9% in personal income between 2015 and 2016. Major drivers including job growth, population growth and tourism, fueled demand for commercial real estate in Palm Beach County. Total Vacancy 16.0% Lease Rate $21.30 PSF Net Absorption 48,000 SF Completions 0 SF Pricing in the Palm Beach County office market remains attractive to investors compared to other *Arrows indicate change from previous year. Tier 1 markets. Figure 1: Total Vacancy -vs-a verage Direct Asking Lease Rate (NNN) Vacancy (%) Vacancy Rate Average Asking Lease Rate Asking Rate ($/SF) 30 22 25 21 20 20 19 15 18 10 17 5 16 0 15 Q4 2008 Q4 2009 Q4 2010Q 4 2011 Q4 2012Q 4 2013 Q4 2014Q 4 2015 Q4 2016Q 2 2017 Source: CBRE Research, Q2 2017. Strong leasing activity mainly in the 1,000 to 5,000 sq. ft. range. LEASING ACTIVITY The overall average asking direct lease rate rose 13.0% year-over-year coming in at $21.30 per sq. conditions such as improving employment growth contributing to increases in leasing activity in the lease rate comparisons by class show average asking lease rates for available Class C properties experienced the largest increase recording a 12.7% properties increased 6.9% to an asking rate of 12
WELLINGTON CORPORATE CENTER III Figure 2: Market Statistics Submarket Total Inventory (SF) Direct Vacancy (%) Total Vacancy (%) Q2 2017 Net Absorption (SF) 2017 YTD Net Absorption (SF) Under Construction (SF) Avg.A sking Lease Rate ($/SF/NNN) Boca Raton 11,447,368 14.3 14.5 30,571 17,478 0 20.75 Delray Beach* 1,380,872 46.9 46.9 (7,504) (13,339) 0 17.45 Boynton Beach 448,063 30.2 30.2 (400) 6,674 0 15.38 Lake Worth 384,9619.2 9.2 (2,071) (806) 0 13.98 West Palm Beach 5,625,097 16.4 16.4 53,602 48,049 0 22.11 Royal Palm Beach 296,578 0.20.2 1,9523,209 0 21.54 Palm Beach 541,306 13.5 13.5 (16,244) (14,635) 0 41.80 North Palm Beach 2,688,428 8.28.2 (11,034)8,354 63,500 21.60 Jupiter 531,540 10.1 10.1 (840) 6,022 0 18.87 Total Palm Beach County 23,344,213 16.0 16.0 48,032 61,006 63,500 21.30 Class A 10,382,222 11.8 11.9 (4,221) (1,569) 0 25.97 Class B 11,379,036 20.7 20.8 57,032 69,941 63,500 17.08 Class C 1,582,9559.0 9.0 (4,779) (7,366) 0 15.76 Downtown West Palm Beach 2,762,596 13.1 13.1 (3,103)( 13,882)0 31.64 Si ource: CBRE Research, Q2 2017. *Denotes: Calculations nclude former Office Depot HQ, 541,690 sq. ft. vacant. Figure 3: Significant Q2 2017 Lease Transactions Submarket Property Tenant Transaction (SF) West Palm Beach Esperante Corporate Center MSD Capital LP 10,963 Boca Raton Yamato Office Center Phoenix Tower International* 9,648 Boca Raton Boca Center Tower I BB&T 8,924 West Palm Beach One Clearlake Centre Prudential Insurance 7,053 Boca Raton Source: CBRE Research, Q2 2017. Sabre Center II HCL America 6,921 * Denotes: A renewal.
Figure 4: Significant Q2 2017 Sale Transactions Submarket Property Buyer Seller Building (SF) Sale Price ($) Boca Raton Peninsula Executive Center C. Talanian Realty Co., Inc. CDR Realty, LLC 187,158 59,750,000 Palm Beach Gardens Professional Centre at the Gardens W.C. & A.N. Miller Development Co. LNR Partners, LLC 88,000 18,600,000 Palm Beach Gardens Concourse Towers Northlake Palm Beach Corp. Starwood Property Trust 142,252 13,810,000 Delray Beach The Arbors CDS International Realty, LLC RexxHall Realty 68,283 8,300,000 Source: CBRE Research, Q2 2017. Figure 5: Net Absorption (000 s SF) 800 600 400 200 0 2012 2013 2014 2015 2016 2017 YTD Source: CBRE Research, Q2 2017. Demand for office space in Q2 2017 resulted in net absorption of 48,032 sq. ft. The West Palm Beach submarket was the most active, posting 53,602 sq. ft. of net absorption. Larger tenants that took possession in Q2 2017 include Health Care District of Palm Beach which leased 42,386 sq. ft. at Flagler Waterview located in Downtown West Palm Beach. Twinlab Consolidation Holdings leased 13,111 sq. ft. at Boca Raton Innovation Center and Healthcare 14 Figure 6: Average Direct Asking Lease Rate (NNN) Asking Lease Rate ($) 30 25 20 15 10 Class A Class B Class C Q4 2012 Q4 2013Q 4 2014 Q4 2015 Q4 2016 Q2 2017 Source: CBRE Research, Q2 2017. Appraiser leased 9,396 sq. ft. at Boca Corporate Center, both located in Boca Raton submarket. Total vacancy in Palm Beach County declined to 16.0%, down 200 basis points (bps) year-over-year. Class B properties saw the largest decrease of 230 bps to a Q2 2017 rate of 20.8%. Class A properties witnessed a decrease of 170 bps compared to this time last year, for a current rate of 11.9%. Class C properties experienced a decrease of 110 bps to a Q2 2017 rate of 9.0%. DEVELOPMENT The first tracked speculative multi-tenant office project to break ground of 30,000 sq. ft. and greater since 2014 is located in the PGA National Commerce Park in Palm Beach Gardens. The Gardens Innovation Center project includes two contemporary office buildings totaling 63,500 sq. ft. with an expected delivery in Q3 2017.
WELLINGTON CORPORATE CENTER III Figure 7: Palm Beach County Sales Volume Millions ($) 800 600 400 200 0 2012 2013 2014 2015 2016 2017 YTD Source: CBRE Research, Q2 2017. Figure 8: Unemployment Unemployment (%) Palm Beach Florida United States 9 8 7 6 5 4 3 2 1 0 2012 2013 2014 2015 2016 2017 Source: U.S. Department of Labor, Bureau of Labor Statistics, June 2017. Figure 9: Palm Beach County -J obsb y Sector Financial Activities 6% Total Government 10% Manufacturing Other Services 3% 5% Construction 5% Leisure and Hospitality 13% Information 2% Professional, Business & Technical Services 24% Education and Health Services 15% Trade, Transportation & Utilities 17% Source: U.S. Department of Labor, Bureau of Labor Statistics, June 2017. INVESTMENT SALES ACTIVITY Five sale transactions closed in Q2 2017, accounting for a total of 548,900 sq. ft. with a total sale volume of $75 million. The average price per sq. ft. came in at $136. Pricing in the Palm Beach County market remains attractive to investors, while rent growth has been steadily improving over the past five years. A noteworthy transaction that occurred in Q2 2017 was the C. Talanian Realty Co. of Peninsula Executive Center located in the Glades/I-95 corridor in the submarket of Boca Raton. The asset traded for $59.8 million or a price per sq. ft. of $319. The property was 97% leased at the time of sale and a cap rate of 6% was reported. ECONOMIC INFLUENCE Job creation continues on an upward trend as well as improvements in the unemployment rate have also persisted. Job creation in the short term should continue to fuel demand for office space which will be limited by lack of supply. Palm Beach County s current unemployment rate is 3.9%, a 50 bps decrease from the May 2016 rate of 4.4%, according to the Bureau of Labor Statistics. The state s non-seasonally adjusted unemployment rate for May 2017 was 4.0% and the national rate was 4.1%. According to a survey by Entrepreneurs Organization, 70% of business owners in Miami- Dade, Broward and Palm Beach counties reported higher sales through Q4 2016 to Q1 2017, and 57% hired additional full-time employees. Business confidence is high among South Florida business owners and based on the survey are outperforming their peers by about 10%. OUTLOOK Indicators are trending in a positive direction with continued growth in 2017. The declining unemployment rate, especially for office using sectors, has pushed vacancy below 17% for the first time since Q1 2008. Job growth is expected to continue for the remainder of the year which will lead to additional positive absorption. Landlords and investors are optimistic as the office market continues to improve at a slow but steady pace and opportunities remain for investors who continue to seek quality core and value-add assets in Palm Beach County.
CONTACT US KEVIN MCCARTHY First Vice President +1 561 227 1808 kevin.h.mccarthy@cbre.com CBRE, Inc. Licensed Real Estate Broker KEVIN PROBEL First Vice President +1 561 847 8603 kevin.probel@cbre.com CBRE, Inc. Licensed Real Estate Broker