62,000 SF Class B suburban office with stable medical and professional tenant base. Recommended path: hold, improve common areas, and pursue medtail conversions.
Three-story Class B building, built 1998, renovated 2019. 4.2/1,000 parking, on-site cafe, generator-backed data closet.
Building systems, envelope, and site improvements were evaluated against age-appropriate benchmarks. Overall condition is consistent with the asset's vintage and prior capital plan; near-term capex is limited to cosmetic refresh and tenant-driven improvements.
Suburban office holding steady; medical office vacancy at 6.8% vs traditional office at 14.2%. Tenant flight-to-quality continues.
Three-method valuation triangulating Income, Sales Comparison, and Cost approaches. Concluded value reflects current market conditions and the asset's position within Central Perimeter Office.
| Cap rate ↓ / NOI → | -5% | Base | +5% |
|---|---|---|---|
| 5.75% | $15.2M | $16.0M | $16.8M |
| 6.25% | $14.0M | $14.9M | $15.4M |
| 6.75% | $12.9M | $13.6M | $14.3M |
Projected stabilized cash flows assume 3% annual rent growth, 2% expense growth, and a 7% vacancy reserve. Returns are illustrative and pre-debt.
| Line item | Yr 1 | Yr 2 | Yr 3 | Yr 4 | Yr 5 |
|---|---|---|---|---|---|
| Gross Potential Income | $1,420k | $1,463k | $1,507k | $1,552k | $1,599k |
| Vacancy & Collection | ($99k) | ($102k) | ($105k) | ($109k) | ($112k) |
| Effective Gross Income | $1,321k | $1,361k | $1,402k | $1,443k | $1,487k |
| Operating Expenses | ($388k) | ($396k) | ($404k) | ($412k) | ($420k) |
| Net Operating Income | $933k | $965k | $998k | $1,031k | $1,067k |
| Capex Reserve | ($28k) | ($29k) | ($30k) | ($31k) | ($32k) |
| Cash Flow Before Debt | $905k | $936k | $968k | $1,000k | $1,035k |
Four medical and traditional office sales. Medical comps trade 75–125 bps tighter than comparable traditional office.
| # | Property | Distance | $/SF | Cap rate |
|---|---|---|---|---|
| 1 | Parkview Medical Plaza | 1.1 mi | $172 | 7.6% |
| 2 | 200 Birchwood | 2.0 mi | $164 | 8.0% |
| 3 | Northgate Professional | 2.8 mi | $166 | 7.9% |
| 4 | Glenwood MOB | 3.5 mi | $176 | 7.5% |
Comp set drawn from arm's-length transactions in the trailing 18 months; outliers (REIT portfolio trades, intra-family transfers) excluded. Adjustments applied for age, condition, lease structure, and location.
| Risk | Likelihood | Impact | Mitigation |
|---|---|---|---|
| Tenant rollover | Med | High | Pre-leasing & early renewal |
| Cap rate expansion | Med | Med | Lock fixed-rate debt |
| OpEx inflation | High | Low | NNN passthrough where possible |
| Insurance market | High | Med | Bundle & higher deductible |
Refresh lobby and restrooms, convert second-floor vacancy to medical suites, then test a partial recapitalization.
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