Wednesday, July 5, 2017

Kairos buys Blue Bell office building

Natalie Kostelni
Philadelphia Business Journal
Kairos Real Estate Partners has picked up another office building in the Blue Bell, Pa., submarket and bought 980 Jolly Road, a 150,000-square-foot building Aetna Inc. had vacated years ago.

The King of Prussia real estate company bought the two-building complex with Artemis Real Estate Partners from Aetna for an undisclosed amount. Montgomery County property records indicate the property traded for $5.27 million.

This is the second office building Kairos has acquired in the Montgomery County community. Last August, the same partnership involving Kairos paid $3.3 million for 518 Township Line Road, a 124,000-square-foot office building.

“We’re doubling down on Blue Bell,” said Stephen J. Gleason, president of Kairos. “We think Blue Bell is a great alternative to the Main Line.”

In general, Philadelphia's suburban office market is doing fairly well as companies lease up space and expand. Markets such as Radnor, Conshohocken and King of Prussia have experienced robust activity, making large blocks scarce and pushed rents up. But for build-to-suits, there has been no new construction underway, giving tenants limited options when it comes to large blocks of existing space.

The increased tightness has pushed tenants looking for space and more affordable rents further out to areas such as Blue Bell, Fort Washington and Horsham. They are markets that are often the last to recover from economic downturn and 10 years ago, many of the same dynamics — a shortage of big blocks, rising rents in first-ring submarkets— were at also at work when there was renewed attention by investors and tenants to Blue Bell and those other markets.

For the overall suburbs, the total vacancy rate stood at 16.7 percent at the end of the first quarter and there was an absorption of 372,539 square feet, according to CBRE Inc. data. Blue Bell, which has nearly 4 million square feet of office space, has a total vacancy rate of 22.8 percent and average asking rents of $28.70.
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