June 20, 2022 9:00 AM
Newmark announces it has completed the sale of South Temple Tower, a 217,000-square-foot value-add office building located in the vibrant North End of Salt Lake City’s CBD. Newmark Co-Head of U.S. Capital Markets Kevin Shannon, Executive Managing Director Ken White and Senior Managing Director Rick Stumm, in partnership with Executive Managing Director Bryce Blanchard, represented the seller, LoanCore Capital in an off-market transaction. The buyer, Hines, plans to transform the office property into a 255-unit luxury multifamily tower.
Located at 136 E South Temple Street in the heart of Salt Lake City’s CBD, South Temple Tower is a 24-story, 217,000-square-foot value-add office building featuring a main floor lobby with retail frontage, 17 office floors, six above-ground parking floors and one below-grade parking floor. The building underwent extensive exterior and interior renovations between 2017 and 2019 including a new lobby entrance, new ground floor/street level retail offerings, newly designed and relocated restrooms on each of the tenant floors, new fitness center, elevator modernizations and upgraded mechanical and communications systems. It was 51% occupied at the time of sale.
Hines, the property’s new owner, intends to embark on a bold office-to-residential conversion as part of a larger strategy the firm has been pursuing to redevelop assets hampered by the pandemic. Designed by Hickock Cole, the 24-story multifamily tower will feature ground floor retail, an expansive amenity offering, and a mix of studios and one-and-two-bedroom residential units paired with high-quality interior finishes. Groundbreaking is set to occur in Q1 2023.
“The lingering effects of the pandemic have disproportionately impacted CBD office markets across the country,” said Shannon. “The decision by Hines to pursue a conversion strategy follows a growing trend of capital seeking to acquire and repurpose underperforming assets.”
“The demand for residential inventory remains at an all-time high in supply constrained Downtown Salt Lake City,” added Blanchard. “The efforts by both parties to successfully navigate a complex off-market transaction will result in a first-of-its-kind project that promises to bring new high-end multifamily units to the bustling CBD.”
The property is situated in the vibrant, desirable North End of Salt Lake City’s CBD, the most highly amenitized and desirable portion of the city. South Temple Tower is adjacent to both City Creek Center and Temple Square and is within walking distance to the convention center and Vivint Arena. The transit-oriented location is just one block from the TRAX light rail station and offers easy freeway access to both I-15 and I-80. The property is also located within downtown Salt Lake City’s Opportunity Zone, offering the new owner potential tax benefits.
Salt Lake City has experienced an unprecedented period of transformation and growth over the past decade, with the CBD serving as the burgeoning urban center for culture, commerce and entertainment. The dynamic work and social environment has solidified Downtown Salt Lake City as the ideal place for young professionals to live, work and play. With its low cost of living, high quality of life, business-friendly environment, and access to a skilled and highly educated labor force, the greater Wasatch Front region continues to be ranked as one of the top performing metros in the nation.
Given relatively stronger market fundamentals, U.S. investors have increased allocations to multifamily properties while decreasing allocations to office assets over the past several years, according to Real Capital Analytics data analyzed by Newmark Research. Between 2007 and 2011, investors allocated 22% of commercial real estate investment dollars to multifamily assets and 28% to office assets. As of the first quarter of 2022, office allocations had declined to 15% while multifamily allocations had risen to 34%, the highest of all major property types.
Newmark Group, Inc. (Nasdaq: NMRK), together with its subsidiaries (“Newmark”), is a world leader in commercial real estate, seamlessly powering every phase of the property life cycle. Newmark’s comprehensive suite of services and products is uniquely tailored to each client, from owners to occupiers, investors to founders, and startups to blue-chip companies. Combining the platform’s global reach with market intelligence in both established and emerging property markets, Newmark provides superior service to clients across the industry spectrum. Newmark generated revenues of nearly $3.1 billion for the twelve months ending March 31, 2022. Newmark’s company-owned offices, together with its business partners, operate from approximately 170 offices with 6,300 professionals around the world. To learn more, visit nmrk.com or follow @newmark.
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