Equity Office snaps up Hughes Center for $347 million

Southern Nevada’s struggling office sector got a big shot in the arm Sept. 20.

That’s when private-equity firm Blackstone announced that it had bought the Las Vegas Valley’s best-known Class A office park.

Equity Office, a Blackstone subsidiary, bought Hughes Center for $347 million from Barclays. A Blackstone statement said it’s the company’s biggest single investment in the local office market, and that it would probably be the largest office investment in Las Vegas in 2013.

“We see this as a tremendous opportunity to add value, both from a market entry standpoint and with our commitment to operate these buildings at the same high level as the balance of the Equity Office portfolio,” said Frank Campbell, managing director of Southern California for Equity Office. “This acquisition is supported by the financial strength of Blackstone, which will position the real estate to perform well as the market improves.”

Equity Office said it will keep on-site staff for a “seamless transition.”

Blackstone is already heavily invested in local residential real estate. The company has snapped up homes across Southern Nevada to rent as investments. Besides buying in Las Vegas, Blackstone has purchased homes in Miami, Phoenix, Chicago and Atlanta. By early 2013, the company had spent billions to buy 16,000 homes nationwide.

Now, in the Hughes Center, at Paradise and Flamingo roads, Blackstone owns the city’s most prestigious office address. The 68-acre site has 1.4 million square feet of space, with tenants including Ameristar Casinos, Wells Fargo and Boyd Gaming Corp.

Blackstone isn’t entering a strong office market: The valleywide vacancy rate was 26 percent in the second quarter, numbers from local research firm Applied Analysis show. That was up from 25.6 percent in the same quarter a year earlier, but down from 26.2 percent in the first quarter. As a whole, Class A spaces such as the Hughes Center had a vacancy rate of 24.1 percent in the second quarter.

Office rents have fallen, too. The average asking lease rate in the Class A submarket in the second quarter was $2.34 a square foot, down from $2.42 a year earlier.

But Brian Gordon, an Applied Analysis principal, said in the firm’s report that the sector may have reached the bottom of its down cycle. The professional and business services sector, which includes law firms, accounting firms and other office users, added 4.4 percent to its jobs base year over year in May, and that could spur office absorption in coming quarters.

Blackstone said in a statement that it’s betting on better times.

“This (Hughes Center) acquisition is supported by the financial strength of Blackstone, which will position the real estate to perform well as the market improves,” Campbell said.

Blackstone said it will keep Colliers International as the Hughes Center’s leasing rep.

TRANSACTIONS

■ Brokers with MDL Group helped close an industrial deal in Henderson.

Jarrad Katz and Galit Kimerling represented the T. Danny Tai &Victoria H. Tai Revocable Trust in its $1.45 million sale of a 17,500-square-foot property at 7541 Eastgate Road.

Eric Molfetta of Colliers International represented the buyer, Lake Las Vegas Property Investments LLC.

And MDL Group’s David Patten represented landlord The GVT Grandkids Trust in its lease of 1,800 square feet at 4550 S. Maryland Parkway to restaurant Wings &Things. The 60-month lease is worth $112,752.

■ Brokers with Colliers International closed several recent deals.

Dan Doherty, Chris Lane and Jerry Doty represented JD Industrial LLC in its $820,000 purchase of a 9,339-square-foot property at 6671 Schuster St.

Taber Thill, represented AppleOne in its 62-month lease of 2,502 square feet of office space inside Pebble Place, at 2140 E. Pebble Road. The lease is valued at $292,013.

Scot Marker represented Central Telephone Company in its 60-month lease of 1,503 square feet of retail space at 6592 N. Decatur Blvd. Dapper Cos. represented the landlord, Eagle Crossroads Center LLC, in the $171,342 deal.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512. Follow @J_Robison1 on Twitter.