Harbor Group International Sells Landmark Asset

With the assistance of Colliers International, Harbor Group International has found a new owner for World Trade Center, an iconic office property in Norfolk, Va., within the Hampton Roads market. An affiliate of HGI sold the 370,000-square-foot, Class A asset to an undisclosed private investor.

“Colliers conducted a national search for investors and was pleased by the response,” Scott Adams, a president with Colliers International, told Commercial Property Executive. “Top investor candidates were from throughout the East Coast and Southwest of the U.S., as well as Canada.” Michael Ettel and Perry Frazer of Colliers joined Adams in representing Harbor in the sale transaction.

World Trade Center at 101 W. Main St., Norfolk, Va. Image courtesy of Colliers International

HGI had owned World Trade Center since 2008, when it acquired the nine-story tower overlooking the Elizabeth River from UBS Realty for $54 million. Carrying the address of 101 W. Main St. in downtown Norfolk, the property offers a “Main and Main” location in the city’s financial district. The building first opened its doors in 1983 at a cost of $30 million and today, it is the site of a bevy of amenities, including a private club, fitness facility, conference room and exterior terraces.

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Presently 89 percent leased, World Trade Center features a diverse tenant roster. Businesses that call the property home include the Hampton Roads Chamber of Commerce, the New York Times, insurance firm USI and the Virginia Port Authority, which maintains its headquarters at the tower.

Off the sidelines

Hampton Roads isn’t just popular among the logistics set these days; investors have revived their activity in the area’s office market with the improvement in confidence in market fundamentals in the pandemic-recovery era, according to a third quarter 2021 report by Colliers International. The vacancy rate for Class A assets in Greater Norfolk was 10.6 percent in the third quarter, and 11 percent for Class A assets in the central business district submarket.

“Norfolk has continued to maintain its position in the Mid-Atlantic and Southeast as one of the most stable markets throughout the pandemic,” Adams added. “Our region has relatively far lower sublease space, new construction, and vacancy rates. Our economy is diversified, and our downtown Norfolk submarket seems to have relatively bounced back faster in terms of density of return to work.”

World Trade Center at 101 W. Main St., Norfolk, Va. Image courtesy of Colliers International

While activity is on the upswing, buyers and lenders, however, are maintaining a certain level of caution. As Colliers notes in its report, “We continue to see investors and lenders using sound underwriting and exhaustively studying all aspects of potential transactions before proceeding.”

All parties involved in the World Trade Center transaction are remaining mum on the property’s price tag. The asset would have had to fetch a figure far above the current average sale price of the area’s office properties for HGI to turn a profit. Top office sales in the third quarter of 2021 averaged approximately $107 per square foot in Norfolk and Hampton Roads, according to reports by Colliers and Cushman & Wakefield, respectively.

The World Trade Center sale and that of other leading office properties in Norfolk imply something important about the local office market. “The depth of competitive investor interest establishes Norfolk as a leading secondary market in the Mid-Atlantic and Southeast region,” said Adams. “Investors that evaluated World Trade Center often look at opportunities in Raleigh, N.C., Charlotte, N.C., Nashville, Tenn., and Charleston, S.C., as well.”