The Metropolitan, a mixed-used project near uptown along the Little Sugar Creek Greenway, was sold Friday for about $94.5 million to institutional investors.
The Metropolitan is the redevelopment on the site of Charlottes oldest enclosed mall, Midtown Square. It was developed by Charlotte-based Pappas Properties and Collet & Associates and Alabama-based Colonial Properties Trust. Anchor tenants include Marshalls, Best Buy and Trader Joes.
We feel the project was so well received in the marketplace that we thought it was the right time to monetize it, developer Peter Pappas said. He said both the office tower and retail space are nearly 100 percent occupied.
Charlotte Powell, a spokeswoman with J.P. Morgan Asset Management, described the buyer as institutional investors advised by J.P. Morgan Asset Management Global Real Assets.
Ken Marshall, executive vice president of commercial assets with Colonial Properties, said the sale reflects Colonials shift to multifamily projects and away from commercial assets.
The project first opened for office tenants in 2008, followed by retail and condominiums. But the once-hot economy started sputtering almost as soon as it opened. Four of the projects 101 condominiums are still for sale.
Brokers say the projects strong tenant mix is an asset, along with its location along the greenway and proximity to Dilworth and uptown.
Calls to CBRE, which has been marketing the property, were not immediately returned Friday. Ryan Clutter, Chris Decoufle, Mike Burkard and Patrick Gildea with CBRE were involved in the deal.
Charlottes center city has seen increased interest from investors during the past year. In 2012, the uptown office market boasted a record sales volume of more than $550 million, beating the previous high from 2007, when roughly $500 million in uptown properties changed hands.
The sales activity reflects growing optimism in Charlottes economic prospects, experts say.
The Metropolitan is in the midtown office submarket, which has fared better than the rest of the area on average. Midtowns vacancy rate was 11 percent as of the third quarter of 2012 compared with an overall office vacancy rate of 17.1 percent, according to figures from the Karnes research firm. The midtown vacancy rate has fallen from 13.2 percent seen in 2011, but remains up sharply from the 5.9 percent reported for 2008, the year the Metropolitans office tower came on the market.
While Charlottes economy and commercial real estate markets are still recovering, the Queen City got a favorable nod during a real estate forecast conference last month. Analysts said the top markets, such as New York and San Francisco, are becoming overheated and prices are climbing, prompting investors to move into secondary markets such as Charlotte. During the conference, attendees were asked which secondary market they would consider acquiring a stabilized office property in during 2013. Charlotte was the top vote-getter, beating tech-heavy Austin and San Jose.