SunTrust Bank Building sells for $32.8 million

The SunTrust Bank Building in downtown Baltimore sold for $32.8 million.

Boston-based Grander Capital Partners purchased the 25-story Class A office tower at 120 E. Baltimore St. It marks Grander’s second major acquisition in downtown Baltimore this year. The firm previously purchased the building at 25 S. Charles St., which is currently home to M&T Bank.

“The sale is indicative of the increased confidence that investors are showing in the Downtown Baltimore office market,” Jonathan Carpenter, executive director at Cushman & Wakefield, which brokered the sale, said in a statement. “This is the fourth major office tower investment sale in 2017, with several more transactions in process.”

Tenants in the building, which was 75 percent leased at the time of sale, include SunTrust, the Maryland Pension System and the Baltimore’s State Attorney’s office.

The building is in a section of downtown that has attracted significant investment in recent years. It’s less than a block away from developer Madison Marquette’s 28-story 1 Light St. project that will be home to M&T Bank’s new regional headquarters.

It’s also across from the historic Alex. Brown & Sons Co. building that is being transformed into The Alexander Brown restaurant and bar. And Choice Hotels International announced plans last week to turn the American Building at 231 E. Baltimore St. into Baltimore’s first Cambria brand luxury hotel.

Grander purchased the 343,343-square-foot office property at 25 S. Charles St. for $24.5 million in April. Despite a boom downtown in converting office space to apartments Grander plans to re-position that asset to attract office tenants. The firm has a “significant amount of money earmarked” to invest in needed upgrades. That includes plans to convert roughly 8,000 square feet of space on the ground floor currently occupied by an M&T Bank branch into street-facing retail, possibly for two tenants.

According to a report by MacKenzie Commercial Real Estate on the Baltimore metro office market’s third quarter performance, there’s been $172 million in sales through the start of the year, outpacing the previous four years.

The median sale price has been $135-per-square-foot with an average cap rate of 7.2 percent. Institutional and private investors are responsible for 68 percent of the sales in the metro market.

Direct vacancy citywide hit 12.4 percent last quarter, down less than 1 percent year-over-year. Average asking rent citywide was $22.64 per square foot, an increase of nearly 30 cents year-over-year. In city center alone, according to the report, the vacancy rate was 14.4 percent and the average asking rental rate sat at $22.79 per square foot.