Sarasota City Center building sells for $36.5M

A Durham, North Carolina-based firm has acquired the 13-story Sarasota City Center office tower downtown for $36.5 million, the third major office sale in the city's core in the past year.

The Dilweg Cos. is planning to inject $4 million to enhance the 245,293-square-foot building's fitness center, hallways, lobby, bathrooms and courtyard in the wake of its purchase, officials say.

Dilweg also intends to create a conference facility and a tenant social space inside the 1819 Main St. building.

“We've been looking at Sarasota for quite a while now, and we think Sarasota City Center is one of the best buildings in the market there,” says Drew Cunningham, a Dilweg partner and the firm's COO.

“It's got a very good location and physical attributes. We plan to expand the amenity package and put some money into updating it and making it more attractive.”

Cunningham declined to reveal the price Dilweg paid for the building, and a deed had yet to be filed with Sarasota County by late Tuesday afternoon. The City Center building and a 23-story office tower in Charlotte, N.C., together sold for $115.5 million, according to commercial brokerage firm Holliday Fenoglio Fowler L.P., which brokered the sales and arranged fixed- and floating-rate financing for the deal with Torchlight Investors of New York.

The building was last sold in February 2000, when Osprey S.A. bought it for $24.85 million, property records show. It was transferred subsequently to Osprey-Sarasota City Center LLC, records show.

The 28-year-old property is occupied by financial firms Merrill Lynch, UBS and Wells Fargo, food maker Boar's Head Provisions Co. and others. Sarasota City Center is currently 88% occupied.

Commercial real estate brokerage firm Colliers International will continue to lease the building, though Dilweg will manage it going forward, Cunningham says.

Holliday Fenoglio Fowler L.P. senior managing director Ryan Clutter, director Scot Humphrey and associate director Chris Lingerfelt brokered the sale on behalf of Osprey.

In addition to Sarasota City Center, Dilweg's purchase includes the First Citizens Bank Plaza office tower in Charlotte, N.C. That 476,393-square-foot building is 29% occupied. Westinghouse Electric Corp., which had occupied 40% of the building, vacated the property last year.

Both buildings were collateral on a $113.3 million, interest-only loan taken out by Osprey in April 2007. The debt matured earlier this month and had been sent to a special servicer last month, according to real estate research firm Trepp.

Cunningham says the previous debt has been retired with the sale.

“We're planning to inject some new life in the building,” Cunningham says of Sarasota City Center.

Since its creation in 1999, Dilweg has acquired roughly $1.1 billion worth of commercial real estate totaling nearly 11 million square feet in Georgia, Tennessee, Virginia and North Carolina and South Carolina, according to its website.

The company presently owns 28 office, retail and industrial properties, the website states.

Sarasota City Center becomes the third major Sarasota office building to trade in the past year. Last month, Githler Real Estate and a New York partner acquired the 11-story Northern Trust Building for $17 million, and in July 2016, the 11-story BMO Harris Bank Building sold for $23 million.

All three deals come as Sarasota's Class A office vacancy has shrunk to single digits and rental rates have climbed over the past three years.