As In-Rel Properties sought a property to expand its holdings in Birmingham, Alabama, it found a trio of buildings it thought presented the firm an opportunity to improve their value.
In-Rel of Lake Worth, Florida, purchased the property, Inverness Center North, a three-star 450,000-square-foot complex, in August 2022 for about $16.3 million, or just over $34 per square foot, according to CoStar data. The seller was RMR Group of Newton, Massachusetts.
For In-Rel, the acquisition of the office park with a parcel of land added to its growing Birmingham portfolio that includes the Beacon Ridge Tower and Center Point Shopping Center.
The deal struck by In-Rel, partly because of the opportunity it represents, earned the transaction the 2023 CoStar Impact Award for the sale/acquisition of the year in Birmingham, as judged by real estate professionals familiar with the market.
The portfolio consists of Buildings 40, 42 and 44 at Inverness Center North, which were originally developed as a build-to-suit for Southern Company Services in 1985. Currently, Buildings 42 and 44 are vacant, and that presents an opportunity for the new owner, according to West Harris, the Harbert Realty Services executive vice president who brokered the deal.
"In-Rel Properties' timing is excellent, and the new owner is in a unique position to take advantage of the increased demand for office space in the submarket," Harris said in the award nomination. "The submarket vacancy also presents an opportunity for tenants to lock in arguably lower effective rental rates on long term leases of seven to 10 years. The owners who will be most successful are the ones who have a deliberate business plan to reposition properties like Inverness Center and execute on the plan before lease commitments."
About the project: Inverness Center North contains three Class A office buildings with a total of 450,000 square feet. the Inverness Center North campus includes a natural lake setting and park.
What the judges said: "The project will open up Class A office space at reasonable lease rate for businesses during economic challenging times," said CoStar Impact Award Judge Janice James Douthard, industrial parks and real estate manager for the city of Birmingham.
CoStar Impact Award Judge Alan Tidwell, associate professor of finance at the University of Alabama and chair of real estate of the Alabama Association of Realtors, said that "from an impact perspective this represents a very large office property transaction of about 450,000" square feet, adding that "two of the buildings are vacant so the purchaser is taking on substantially more risk to lease out compared to a preleased building purchase. The new owner has the potential to have a large economic impact in the area with successful lease commitments."
They made it happen: West Harris, executive vice president, and Bo Farlow, director of investments, at Harbert Realty Services.
