Saturday, March 20, 2004

Chiquita Center changes hands

By Ken Alltucker
The Cincinnati Enquirer

A New York investor has acquired the 29-story Chiquita Center on Fifth Street - the fourth major downtown office tower to change hands in six months.

The Andalex Group last week completed the purchase of the 537,400-square-foot tower from Los Angeles-based Lowe Enterprises.

Andalex declined to reveal a purchase price. Company principal Alex Silverman said it was less than the $72 million that Lowe Enterprises paid for the building in 1999. The Hamilton County auditor values the tower at $66.4 million.

Silverman said the purchase fits the family-owned investment group's strategy of buying downtown office towers with stable tenant rosters.

The building's namesake, Chiquita Corp., is the largest tenant with about 120,000 square feet under lease. Other large businesses include Great American Financial and Deloitte and Touche. The building is 90 percent leased, said broker Chuck Male of CB Richard Ellis.

The Chiquita Center sale continues the trend of large, institutional investors selling Class A office space in downtown Cincinnati to smaller or family-run investment firms. But unlike the three most recent sales, Andalex has no immediate plans for major upgrades.

"The building's in really good shape," Silverman said. "We have a different philosophy, more of a hands-on approach. Any tenant can pick up the phone and call us."

In December, two out-of-town investors purchased the office towers to the east and west of Fountain Square for substantially less than the amount paid by previous owners. Philadelphia-based Berwind Group bought the 580 Building on Walnut Street for $31 million, and Pittsburgh-based McKnight Development acquired the 525 Vine St. tower for $16 million.

Berwind officials plan to add retail space and improve the lobby of the Walnut Street tower. McKnight said it would spend $5 million to create a new, street-level lobby expected to coincide with the planned redevelopment of Fountain Square.

The third major sale came last October when Convergys Corp. spent $63.8 million to buy the Atrium One office tower where it will consolidate most of its Cincinnati workforce.

The sales prices are a reflection of the current market conditions of downtown's Class A office space, said Dave Ebbesmeyer, research director of Grubb & Ellis West Shell Commercial.

Lowe purchased the Chiquita Center at a time when downtown vacancies were rare. Downtown's Class A vacancy rate has shot up from 4.5 percent in 1999 to 12.5 percent as of December 2003, according to Grubb & Ellis.


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