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BUYER: SHA Realty Holdings LLC (members: P&D Irrevocable Trust, Robert Costello and Vincent Costantino), Palm Beach Gardens
SELLER: Iberiabank
PROPERTY: 2150 Goodlette Road N. and 1465 Golden Gate Parkway, Naples
PRICE: $14 million
PREVIOUS PRICE: $15.5 million, April 2005 and $465,300, February 2006
LAW FIRM ON DEED: Coleman Yovanovich Koester PA, Naples
In virtually any other Gulf Coast market, selling an office building for $228 a square foot would be a crowning achievement. Not in Naples, where the $14 million sale of the eight-story Iberiabank building is slightly below the current average sales price ($237 a square foot) for office space. The sale stands as a testament to the rapid gains in the Naples office market, particularly over the past 18 months.
Area businessmen Robert Costello and Vincent Costantino and a trust purchased the 61,278-square-foot Iberiabank building on 2.65 acres along with an adjacent 2.64 acres to the east containing additional parking.
According to the Florida Division of Corporations, the two partners are officers with Innovative Capital Holdings, a Naples-based global private investment firm that specializes in buying and managing businesses in the automotive, aviation/aerospace and industrial manufacturing industries. Costantino's LinkedIn page also reports until 2014 he was CEO of Coral Springs-based Tridien Medical, which manufactures and markets medical support surfaces and patient positioning devices.
The two partners did not reply to requests for comment.
David Stevens and Clint Sherwood of Investment Properties Corp. handled the transaction.
The Iberiabank tower originally served as the headquarters of First National Bank of Naples, until Fifth Third Bank acquired that bank. Orion Bank purchased the building for $15.5 million in 2005 and acquired the adjacent property next door 10 months later. Iberiabank took over the business of Orion Bank after it failed was closed in 2009.
A reason for the building's below-average pricing stems from Iberiabank's decision to scale back its operations in the 24-year-old building to just four floors. Sara Dewberry, a spokeswoman for Iberiabank, says the bank chose to sell the building “to monetize an asset that had appreciated in value.” The bank signed a 10-year lease with the new ownership with three additional five-year renewal options. It plans to continue to operate its Southwest Florida headquarters there from the bottom four floors, but the change leaves half the building unoccupied.
Stevens was uncertain whether the buyers planned to lease the remainder of the space or intended to occupy it themselves. In addition, he says the largely vacant eastern triangular piece of land has the potential to be developed sometime in the future.
“This will turn out to be a very good price, once they get it stabilized and occupied,” Stevens says.
If the buyers decide to lease out the space, the market is working in their favor. Research firm CoStar Group reports that vacancy rates for all multitenant office space in Naples has fallen from 14.3% in the second quarter of 2012 to 9.8% for the current quarter. Gross asking rents per square foot are also up from $19.87 in the third quarter of 2014 to the current $21.06.
One reason for the office market's improvement is a lack of supply.
Currently, there is a lack of new office and medical office space in Naples.
“The inventory for higher quality income properties in the Naples market is particularly very tight,” says Dougall McCorkle, senior vice president commercial real estate for Premier Commercial Inc. “There is a lot of pent up demand by investment groups that want to deploy some money in better yielding assets than bonds or stocks.”
Dave Wallace of CRE Consultants attributes the improvement to growing consumer confidence combined with available capital and the lack of other good investment options.
“There have been a couple properties that drew some institutional interest, mainly the Mercato and SunTrust sales,” he says.
Currently, there is a lack of new office and medical office space in Naples.
“The inventory for higher quality income properties in the Naples market is particularly very tight,” says Dougall McCorkle, senior vice president commercial real estate for Premier Commercial Inc. “There is very little investment grade on the market, and they are becoming a little more sought after than in years past. There is a lot of pent up demand by investment groups that want to deploy some money in better yielding assets than bonds or stocks.”
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