The New York-based DRA Advisors sold two glassy office buildings just off of Highway 169 in Plymouth, according to a certificate of real estate value made public this week.
Northpath Investments purchased both properties in one transaction for $23.3 million, a price tag that reflects a 65% drop from what DRA forked over for the offices.
The two properties are located at 505 and 605 Highway 169 in Plymouth. DRA bought the 605 building in 2015 for $31.5 million and the 505 building in 2018 for $36.1 million, according to previous reporting from Finance & Commerce.
According to a Catylist listing of the property, the 505 building was built in 1987, is 12 stories tall and has about 271,800 square feet of space. The 605 building was built two years later, is also 12 stories tall and is just shy of 207,600 square feet. Both buildings have under a 75% occupancy rate, according to the listings.
Northpath Principal Gershon Alexander said in an interview Wednesday his firm was attracted to the site because he thinks there is a lot of “upside” to the building and loves the Twin Cities market. Alexander said his firm is confident it will be able to fill the buildings’ vacant space.
“Obviously there would be concerns, but we feel that this market has enough vibrancy that will be able to fill it up,” he told Finance & Commerce. “We’re going to be going through a capital improvement project, we’re going to be putting some money into the building to make it look better, we’re going to be beefing up the amenities and we hired a designer to really work with us.”
Value-add opportunities are usually what Northpath looks for in a property, Alexander said.
“There’s leasing happening in this market and we can create the best-in-market product,” Alexander said. “We’re fairly confident that we will lease them.”
Northpath, a New York City firm, has no other assets in the Twin Cities metro. Most of their portfolio, according to the Northpath website, is located along the East Coast.
With a combined space of 479,462 square feet, the price works out to be $48.49 per square foot. This is almost $100 less per square foot than what DRA paid for the two buildings.
Hennepin County tax records list the estimated market values for the properties at $23.8 million for 605 and $31.1 million for 505. According to previous reporting, when Artis REIT sold 605 to DRA, there was an 89% occupancy rate.
According to previous reporting, Ryan Cos. constructed both buildings.
The sale was facilitated by Colliers’ John McCarthy, Kyle Delarosby and Peter Nicoletti. McCarthy declined to comment on the sale, citing client wishes.
According to a Colliers Q2 2024 report on the office market, the I-394 Corridor submarket in which Plymouth is located has an overall vacancy rate of 11.5% and for Class A buildings, it’s 27.6%. The report said there was a “pronounced” 17.7% year-over-year increase in vacancy among class A office buildings.
In a July interview on the report, Colliers Executive Vice President Michael Gelfman said a great deal of Class A office buildings have been taken to the market and not sold.
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