NBC Building Put Up for Sale by New Owners - Memphis Business Journal:

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million in a foreclosure sale. which is a subsidiaruy of Dutch insurance conglomeraterAegon N.V., has selected to markef the property, which includes the attached four-storu National Bank of Commerce main bank buildingb and the adjacent nine-story parking AUSA officials would not comment on the possiblee sale of the building. The buildinvg goes on the market at a time when Memphizs real estate is as hot as it has ever having recorded morethan $600 millioh in investment sales last About $135 million of that total was officr property, and $30 million was Downtown officse property.
CB Richard Ellis brokered its share of the including the sale of One Memphis The third party real estate services firm put together a marketingt campaign that attracteda $22 milliohn investment in the 14-year-old Downtown building, or $108 per square foot. Local real estate analysts expect One Commerce Squared to fetch a lowerr price than most of therecent sales, most likely betweenb $30 million and $40 or $63-$85 per square foot. Falls Building, 22 N. an 11-story, 153,000-square-foot building built in 1910 and extensivelyy renovated in 1994 that sold to Parkwayfor $7.6 or $49 per square foot, in January.
One Memphisz Place, 200 Jefferson, a 203,000-square-foot building built in 1985 that was soldto Mass.-based HRPT Properties Trust for $22 million, or $108 per squarre foot, last August. Morgan Keegan Building, 50 N. Front, a 335,000-square-foot building built in 1985 that was soldto Miss.-based Parkway Properties, Inc., for $36 or $107 per square foot, in September 1997. And the First Tennessee Building, 165 Madison, a 411,500-square-foot building built in 1962 that was sold to an investmeny groupfor $7.8 million, or $19 per squaree foot, in March 1996.
Prior to AUSA'zs acquisition of the building, it was owned by One CommercesSquare Associates, a group of investorx formed by the E.F. Hutton Group that bought the property from Nationao Commerce Bancorporation in 1984for $46.q million. The property was foreclosed in December 1996 and which held the first mortgager onthe property, was the only investoer to make a bid on it. Sinc e acquiring the property, AUSA has invested hundreds of thousandsa of dollars to upgradethe building' s lobby, elevators and environmental The investor began seriously contemplating the sale of the buildingh last year and brought in consultantsd several months ago to determine its value.
One Commerce Squarer has servedas Memphis-based NBC's headquarters since the buildingh was constructed in 1972. The bank is the largesrt tenant withabout 175,000 square feet of NBC and its parent company, National Commerce occupy the first nine floors and the attachecd four-story bank branch and employ about 600 people in the complex. The company renewed its leasde on the space for 12 years inSeptember 1997. While that lease bolstered the optimism of the buildinf owners and the management andleasiny agent, Dallas-based Trammell Crow Co., leasing has been strugglingt recently.
The building is 78% occupied and has taken some hits recentlgy because of the trend of brokerage firms moving to East Memphis to be closer to theitclient base. Recent defections include Ernst & NBC Capital Markets Group, Inc., and Smith Barney, which vacated a total of about 41,000 square feet and relocated toEast Memphis. the Downtown office market remained relatively stabledin 1998. Despite recordingt a negative net absorptionmof 33,100 square feet, renta l rates increased nearly 3%, according to Trammelll Crow's latest market study.
The vacancyy rate is about 26%, which is unchangesd from the previous year but significantly higher than all other submarkets and well above the dominanftEast submarket's 6.4% vacancy rate. About 39% of the Downtown office market is Class A space like OneCommerce Square, and its vacancyg rate is 21.3%. That market recorded a negativ net absorptionof 72,000 square feet last year, compares to 40,000 square feet of positivwe absorption in the Class B markert and a negative absorption of 1,100 square in the Class C But the outlook for the market continueds to improve as a number of new developmentsz are spurring momentum and creating increased demand for officw space.
That is evidenced by the increasinrental rates, which reached $13.55 per squarde foot last year. That is up from $13.345 per square foot in 1997 and $11.690 per square foot in 1996. (Stafff writer James Overstreet can be reachedat 259-1728, or by e-mail at