Norfolk Tower Trades at $111 a Foot

Connect CRE reports that Newmark arranged the $26 million sale of 150 West Main Street, a 21-story, 233,772-square-foot trophy tower in Norfolk's Waterside District, with Kawa Capital Management buying from Gate Petroleum Company and Mark Williford, Will Bradley and Evan Wells brokering the trade. The building sits along the Elizabeth River, within reach of more than 60 restaurants and more than a million square feet of retail and entertainment, and it has averaged 90 percent occupancy since construction in 2002. Williford described the asset as a beneficiary of tenant and capital flight to quality, with the highest rents in the market.

The sale works out to roughly $111 a foot, a print that becomes the comp for the next appraisal, loan request, and trade in Norfolk, where a stabilized trophy has now cleared at that level. Recovery is happening trade by trade, with buyers setting prices rather than waiting for a rising tide to lift every asset. Last week Thor Equities agreed to pay $218 million for 1359 Broadway, a Midtown tower 95 percent occupied, at $7 million under its asking price; there, too, the buyer took a quality asset at a price the market would actually clear.

Newmark's week shows both sides of the repricing, the platform having placed a $277 million construction loan on Urby's 748-unit Jersey City tower, a transaction that prices new supply as if the recovery is already here. The Norfolk sale prices existing supply at a level that says the recovery has not arrived in every market: construction debt is being underwritten on the future, office trades on what a building yields today.

None of this makes 150 West Main a distressed asset; it is a 90-percent-occupied tower with the market's best rents and a property a seller could reasonably hold. The print matters precisely because the building is good: if that is what a buyer pays for a nearly full trophy in Norfolk, the marks on lesser buildings will follow. Office values reset one closed sale at a time, and the new comp gets used until the next trade.