Sale of 32 Summerlin office buildings worth upwards of $127 million in the works
Sale of 32 Summerlin office buildings worth upwards of $127 million in the works
General Growth Properties is trying to sell its local office portfolio, 32 buildings in Summerlin that total 1.1 million square feet and could fetch a sales price of up to $127 million, according to several Las Vegas brokers.
A deal hasn’t been finalized, but sources say the likely buyers are Houston-based Hines Interests LP, a real estate giant with properties around the world, and Los Angeles-based Oaktree Capital Management LP, an international investment firm.
A sale could close as early as this month, two people knowledgeable about the deal said. Hines and Oaktree are said to be paying around $115 per square foot — or $127 million total — although brokers said the final price could be less.
The sale would boost the valley’s commercial real estate market, which has struggled with high vacancy rates and sliding rents. Northwest Las Vegas, where the buildings are located, had an office vacancy rate of 26.4 percent in the second quarter, higher than Southern Nevada's 23.7 percent vacancy rate.
Summerlin in particular has been a “tough” market that has failed to become a stand-alone office destination, commercial broker Douglas Crook said. Owners often have to offer tenants perks and incentives to fill office space there.
“They haven’t really turned the corner with that,” Crook said.
The deal would be one of the largest commercial real estate deals in years and rival the mid-2000s sale of a cluster of buildings in southwest Las Vegas, said Dan Palmeri, director of Commerce Real Estate Solutions. That 400,000-square-foot complex sold at the height of the building boom for more than $300 per square foot, or at least $120 million total, said Ryan Martin, office division vice president for Colliers International in Las Vegas.
“This would be the largest office sale in quite some time,” Palmeri said of the General Growth Properties deal.
Still, the properties have their share of problems. About half of General Growth Properties’ office space reportedly is vacant, and it’s unclear how, or if, Hines and Oaktree will fill it with tenants.
General Growth Properties, Hines and Oaktree all declined comment.
Martin said the sale is a rare chance for an investor to “control a good portion of the market in one deal.”
If it goes through, the deal would mark Hines’ entry into Las Vegas. The company controls almost $23 billion in assets, with properties in the United States, Brazil, China and many other countries. But it does not list any properties in Nevada, according to its website.
“You just don’t get a lot of opportunities where you can take down a hefty amount of square footage in this town,” Martin said.
The deal also would let the once-bankrupt General Growth Properties focus more closely on its main business, shopping malls. The Chicago-based company owns or partially owns 149 regional malls, with four in the valley, including Fashion Show mall and the Grand Canal Shoppes at the Venetian.
Most of its local office buildings are on North Town Center Drive, Covington Cross Drive and West Charleston Boulevard.
Brokers say General Growth Properties has actively been trying to sell the properties for several months. Much of the now-vacant space was occupied by Bechtel SAIC Co. LLC, according to sources.
Bechtel ran the U.S. Department of Energy’s nuclear-waste depository project at Yucca Mountain, about 90 miles northwest of Las Vegas. It reportedly was ousted from the project in 2008, and the project itself later was tabled.
