Kenwood Management Company has acquired 9011 Chevrolet Drive, a single-story, 19,259-square-foot commercial office building located in Ellicott City, for $3.25 million. The two-story building was constructed in 2000 and is contained on an approximate 2.5-acre site, which also includes free parking.
The asset fronts Chevrolet Drive and is located in proximity to Baltimore National Pike (Route 40) and Route 29, approximately three miles from Columbia Town Center. Owen Rouse, senior vice president, investment sales; and David McClatchy, senior vice president and principal of MacKenzie Commercial Real Estate Services, represented KMS Associates in the sale of this fully-leased and occupied asset. The buyer was self-represented in the transaction.
Rouse spoke of a healthy environment in the office market. “Despite the continuing negative headlines about rising interest rates and the purported toxicity of the suburban office asset class, tremendous opportunities persist for sellers and investors, both locally and nationally,” said Rouse.
“Office as an asset class represents approximately 60 percent of the investable universe. After subtracting institutionally-owned assets in multi-family and industrial, as well as rarely-available retail assets, selected office investments can provide opportunities for smaller and private investors,” he said. “The barrier to entry remains exceedingly high in many markets and various other fundamentals are at play that make this asset class extremely attractive.”
Rouse said with the historically-low interest rates of the past several of years, there is expected to be considerable pain for investors who look to refinance their properties in the not-too-distant future. “Large amounts of equity will be lost when these assets are refinanced at higher rates and with lower loan proceeds for some, this exercise might not be survivable.
“The hybrid work model seems to be stabilizing over the past several of months, and more companies are being empowered to set and enforce guidelines for employees to return to work, which is excellent news for owners of commercial office buildings,” Rouse said.
He added that “holding an asset too long in an illiquid or declining market can force owners to become extended check writers due to rising expenses and vacancies” and that “investors cycle into and out of positions for specific reasons, and assets can become increasingly difficult or easy to manage as they age.”
Nearly 75,000 people reside within a three-mile radius from the building, including more than 26,000 households with an average household income eclipsing $190,000. The tenant roster is a 50-50 mix of medical and traditional office space users.