Sterling Group Sells Five-Property Portfolio

DETROIT-The Sterling Group has sold a portfolio of five office buildings in the Downtown here, including the 35,000-sf Sterling building at 220 W. Congress, the 45,000-sf Shelby/Congress building at 607 Shelby St. and the 35,000-sf Radio One building at 250 Franklin St. The sale, to an undisclosed New York City-based investor, had a price that was also not revealed, though the buyer took out a $6.7 million, five-year loan for the properties with a life insurance company through locally-based CBRE Melody.

Exclusive Realty listed the properties, but did not return a phone call for comment. According to the company Web site, 250 Franklin was offered for $2.2 million, the Shelby/Congress building was offered for $2.6 million and the Sterling building was offered for $2.3 million. For comparison, a similar property, the 30,000-sf 511 Woodward building, sold for $10 million, though that was included in the Wayne County portfolio purchase that included the 505,000-sf Guardian Building at 500 Griswold, also sold by the Sterling Group. Sources say the group will still lease and manage the properties.

Jason Brown, director of CBRE Melody, says the other two properties are smaller, and are located in the Financial District and Rivertown areas. A surface parking lot was included in the sale, he says. The properties are all have above market occupancy, he says. The Sterling Group itself leases space in the self-named building, and radio stations WDTJ, WHTD and WCHB, owned by Radio One Inc., operate out of 250 Franklin.

Exclusive lists lease rates at 250 Franklin, a high-tech office warehouse, at $18.50 per sf for office space, and $7 per sf for industrial space. The Sterling Group Web site lists lease rates at the Shelby/Congress at $14 to $16 per sf, and $14 per sf at the Sterling building.

Financing for the properties was difficult, given the economy, Brown tells GlobeSt.com. “We’ve obviously seen a major deterioration in credit markets nationally, and especially in Detroit,” he says. “Everything’s challenging here, but we shopped the market pretty hard, and had a good, solid buyer to work with.”

He confirmed that the buyer was not the Northern Group, which owns the three-office-building portfolio dubbed the Downtown Collection in Detroit and the 400-unit Alden Towers apartments, recently purchased the 22-story Lafayette Towers apartment complex for $16 million, and plans a $150 million retail and multifamily project named Cadillac Centre for the Campus Martius district in the city. “There’s no doubt that a lot of New York City money is at least attempting to enter the Detroit market, there’s a lot of capital being assembled to invest here, they clearly think there’s potential in our Downtown,” Brown says.