Rochester downtown building sells for $10 million
A $10 million sale of a downtown building shows the city center's real estate remains hot as the temperatures start to drop.
An international real estate investor, represented as Baheya LLC, purchased the Brackenridge Skyway Plaza at 21 Second St. S.W. on Sept. 30. People involved with the deal declined to release the investor's name or more details.
Brackenridge is an almost fully leased commercial building with long-term tenants that include Mayo Clinic, Erberts & Gerberts sandwich shop, the Zumbro Valley Medical Society and a small scarf store along the skyway.
Baheya purchased the 50,000-square-foot complex from the Bishop family of Rochester as an investment and has no plans to make any major changes, said Ahmed Elkhalifataha of Oxford Property Management. The tenants have leases, and they are all expected to remain operating as they do now.
Rochester's Oxford Property Management organized the deal for the Middle Eastern investor as it did in two previous downtown real estate purchases connected to the plaza. In 2011, Oxford helped Baheya buy the Odd Fellows building at 23 Second Ave. S.W. for $5.3 million. The 18,000-square-foot corner building houses the Eagle Drug Store, Essence Skin Clinic, the Nail Bar, WSB & Associates, HDR architects and Newt's Express .
Oxford is known to work with international clients interested in investing in Rochester. Last year, Oxford helped orchestrate the $7 million purchase of the seven-story Associated Bank building at 206 S. Broadway. That acquisition, by Bloom Properties LLC based in Abu Dhabi, United Arab Emirates, is not connected to the Brackenridge project.
"This was the first investment we worked on with Baheya," said Elkhalifataha. "He was very interested in investing in Rochester."
Oxford Management President and CEO Mark Dickson said the Middle Eastern family behind Baheya has been coming to Mayo Clinic for many years. The man came here in 1999 and eventually established residency here, though he travels back to the Middle East for part of the year.
Oxford also helped with Baheya's $2.6 million purchase and renovation of what is now known as The Baheya Food Court at 100 First Ave. S.W.,
It is across the skyway from Newt's Express. The purchase included the top floor of the building, which houses high-end suites designed for international visitors.The building's main floor and basement are owned by George Psomas, who also owns Mac's Cafe and Restaurant.
Elkhalifataha estimates the entire food court investment, including purchase and construction, came to about $4.7 million. It is now almost completely full of food vendors, and it is growing in popularity as a downtown lunch spot, he said.
Following those acquisitions, purchasing the adjacent Brackenridge building seemed like a logical move. What made this deal different is it was financed through a loan from Wells Fargo Bank with the assistance of Oxford and attorney Brian Childs of Rochester office of Fabyanske, Westra, Hart & Thomson. Attorney Bill Ryan of Rochester's Dunlap & Seeger law firm represented the Bishop family.
Baheya made the previous two purchases without any loans or outside financing, Elkhalifataha said.
While the $10 million or $200 per square foot purchase is high for downtown Rochester real estate, Dickson points out that it is less per square foot than Baheya's previous two deals. The $5.3 million price of the Odd Fellows building was about $294 a square foot. In comparison, the 34,384-square-foot Lanmark Center at 201 S. Broadway, was sold by Iowa real estate investor Mark Kramer for $7 million or about $203 per square foot in 2003.
Dickson does concede that the value of downtown property is climbing due to the excitement spurred by Mayo Clinic's Destination Medical Center.
"There is a lot of international interest in Rochester. They are watching all of growth here," said Dickson. There is a lot of opportunity here right now."