Bank of America is taking a huge chunk of space in a trophy Boca Raton office tower once home to two major corporate headquarters, W.R. Grace andTyco International.
One Town Center soon will be occupied by the banking giant, which is leasing 62,000 square feet on the seventh through ninth floors of the 10-story building. Bank of America is expected to consolidate several offices in the space, including offices for its affiliate, Merrill Lynch.
The deal is a big coup for One Town Center’s co-owner, Tom Crocker, who built the 190,000-square-foot tower at 1 Town Center Road.
“It’s a signature property,” said Peter Reed, managing principal of Commercial Florida Realty Services.
In addition, the deal reflects the continued consolidation by BofA, which late last year inked a deal to lease 29,000 square feet in Esperante Corporate Center, in West Palm Beach. BofA and Merrill Lynch will move there from other offices in the city. Crocker also is a part owner in West Palm Beach’s Esperante.
Bank of America is expected to move into One Town Center later this year. Renovations are underway now.
Crocker’s deal with Bank of America is a feather in the cap of this Boca Raton-based developer, who once was a prolific builder in this ritzy city. Not only did he build the mixed-use Mizner Park shopping center downtown, Crocker also built several large commercial complexes in the city’s central district, near the upscaleTown Center mall.
They include One Town Center (formerly Crocker Tower), which sits next door to the mall; Boca Center (formerly Crocker Center), a mixed-use office, retail and hotel site along Military Trail nearby; and The Plaza office center (formerlyCrocker Plaza), also near the mall.
Crocker sold them years ago, but then bought them all back late in late 2014 in a joint venture between his Boca Raton-based Crocker Partners and Glastonbury, Conn.-based Cornerstone Real Estate Advisers. Crocker also purchased the One Boca Place office building on Glades Road.
Crocker Tower’s first tenant back in 1990 was W.R. Grace, a specialty chemical maker from New York. When the company downsized after an accounting scandal and other problems, Tyco took over the tower. Then the conglomerate encountered problems, including its own accounting scandal, and the company left the building in 2012.
The property remained empty while then-owner Met Life tried to find a single user. In 2013, however, that idea was abandoned and brokers were told topeddle the space as a multi-use office tower. A renovation resulted in the spiffing up of the building’s lobby, among other improvements.
The building landed its first tenant, Kayne Anderson Real Estate Advisors, and then the Kaufman Rossin accounting firm leased office space.
But the property received a big boost when last year Crocker bought back this tower, along with the other office properties.
Now, with BofA moving in, “We’e got a rent roll that rivals anybody,” saidMichael Erickson, a senior vice president for CBRE, which handles the tower’s leasing.
The tower now is 80 percent leased, up from 30 percent in 2014, with only about 30,000 square feet remaining.
Along with the higher vacancies come higher rents: One Town Center now fetches $35 per square foot, not including about $14 per square foot for taxes and maintenance, Erickson said.
But the higher price takes into account the upgrades and renovations Crocker plans for his properties. Restaurant broker Tom Prakas of Prakas & Co. in Boca Raton is charged with securing eateries for the office buildings. For One Town Center, Prakas said he has a 5,000-square-foot restaurant space available, plus patio space.
At the Plaza, One Boca Center and Boca Center, Crocker is seeking the city’s OK for separate restaurants to be built out in front of the buildings. Prakas said he has waiting lists of restaurants that want space in what he called the “epicenter of Boca.”
Upgrading existing office buildings makes sense, brokers say. Developers aren’t interested in building new office buildings because they are hard to finance, said Neil Merin, chairman of NAI/Merin Hunter Codman in West Beach.
Instead, vacant land once slated for offices is being transformed into apartments and shops, said Keith O’Donnell, a principal with Avison Youngin Boca Raton. This is particularly the case in the Park at Broken Sound(formerly the Arvida Park of Commerce), once home exclusively to industrial research properties.
That means existing office buildings are popular with buyers who think they can make money by freshening these older properties with big renovations.
Crocker’s reinvestment is a prime example. “Crocker has always been a pioneer,” O’Donnell said. “Now instead of building, he’s renovating. I appreciate the fact that Tom has a vision to come back again into this market.”
Crocker is making his play on a big scale, but others are doing it on a smaller scale.
One developer is Malcolm Butters of Butters Construction of Pompano Beach. This month, Butters paid $6 million for a property at 851 Broken Sound Blvd., the Rexall Sundown property. Butters said he plans to spend another $3 million renovating the 60,000-square-foot building and then lease it out. He said the property is suitable not only for corporate users but also for smaller, professional tenants such as law firms or financial firms.
“With no new office construction taking place, (offices) are getting filled up,” Butters said. “This building has nice frontage on Congress Avenue, it’s near Tri-Rail and close to I-95. I think it’s going to do well.” The renovation should be complete by year-end.
Crocker’s higher rents have pushed rents up throughout the area, said John Criddle, a Cushman & Wakefield director in Fort Lauderdale. This comes at a time when available office space is shrinking, according to Cushman & Wakefield’s 2016 first quarter report.
Criddle is tasked with leasing 5401 Broken Sound, formerly occupied by Applied Card. The 66,000-square-foot building has views of a golf course, theOld Course at Broken Sound.