News came Friday that the private equity giant Blackstone is buying more than a $1 billion worth of suburban office buildings, a contrarian move given how much focus has been on urban neighborhoods in top markets like Washington, New York, San Francisco and Boston since the recession.
In the deal, Blackstone is getting 82 properties in Atlanta, Chicago, Columbus, Dallas, Minneapolis, Orlando and Tampa. So not only is it a big bet on the suburbs but on the Midwest, which the recession has treated very poorly. Garrison Keillor would be proud.
The seller, Duke Realty Corp., also owns quite a bit in the Washington suburbs as well, especially Alexandria, Chantilly and Sterling.
But Duke Realty spokesman Ron Hubbard said Friday that the sale to Blackstone nearly finalized Duke’s efforts to, “sell some suburban offices and move to a higher concentration of industrial or bulk distribution product.
Hubbard explained that the buildings in the sale were dated and in areas that were likely to experience slower growth. “There are certain buildings we own in certain submarkets that are older...then there are also some that require a little higher capital expenditures.”
Is Duke looking to sell its Washington-area properties as well? Make your best offer. Duke could sell more of its office properties, “in dribs and drabs the next few years,” Hubbard said. “Would it be [in] Washington, D.C. versus a 20-year-old building in Cincinnati? Probably not. But it depends on what a hungry buyer is willing to pay.”