Meadows owner to spend $3 million on upgrades

March 13, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

Faced with aging buildings and the impending departure of a major tenant, the new owner of the Meadows Business Park intends to invest roughly $3 million over the next three years to upgrade the Woodlawn complex's image and raise its occupancy.

Emmes Realty Co.'s plans for the 22-building business park include coverting some of the office and industrial space to retail usage in an effort to capitalize on market trends and on a $126 million government office complex set to open nearby. The company also hopes to sell five buildings in the complex after the U.S. Health Care Financing Administration completes its departure in the fall. Improvements to landscaping and signage also are planned.

"Our biggest challenge will be to get the project back on the map and show that we know how to do deals and are a good landlord," said Richard R. Previdi, an Emmes principal and former managing partner of the Trammell Crow Co., the nation's largest commercial property owner.

Emmes, a New York real estate investment firm whose $400 million portfolio includes 235 projects in five states, acquired the Meadows park last October for roughly $25 million in conjunction with Apollo Real Estate Investments Ltd. Partnership, an affiliate of a $4 billion merchant bank controlled by former Drexel Burnham Lambert merger and acquisitions specialist Leon Black.

The 1 million-square-foot collection of office, industrial and retail buildings, which were constructed between 1961 and 1973, is roughly 80 percent occupied.

That occupancy level is scheduled to drop precipitously, though, begin

ning in May, when the U.S. Health Care Financing Administration starts to vacate four of the park's buildings to move into a new $126 million complex nearby.

By October, the government's departure will lower the park's occupancy level to 50 percent.

As a result, Emmes is offering to sell the four government-occupied buildings and another vacant one for $15.3 million, according to a proposal being circulated by Emmes.

"I think in general they're on target," said Steven H. Gassaway, senior vice president of CB Commercial Real Estate Group Inc. "The market is beginning to play into their hands, to a degree. Vacancies are tightening, rental rates are inching up, and a lot of businesses use that market to serve the entire metropolitan area."

But Emmes' major improvements center on converting three buildings near the 108,848-square-foot Meadows Shopping Center from their current industrial use to retail space, said Nina Weissenberger, an Emmes asset manager. The three buildings, which are zoned for retail use, contain 120,000 square feet.

"We're encouraged by the market's trend," Mr. Previdi said. "And while the government is moving out, we're still the low-cost provider of space surrounded by 4 million square feet of government-owned space. If we can get back to market occupancy rates, we can make money."

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