Velocis Acquires 90k SF of Rockville Office Space in JV with Altus Realty; Plans Life Science/Lab Space ConversionJuly 27, 2022
Two-Building Research Square located in the desirable Shady Grove biotech cluster
ROCKVILLE, MD. – (July 27, 2022) – Velocis, a Dallas, Texas-based private equity real estate manager, acquired the two-building Research Square at 1500 & 1550 Research Blvd. in the Shady Grove submarket of Rockville, Md., in a joint venture with Arlington, Va.-based Altus Realty.
The acquisition includes 89,640 square feet of office space across two buildings on 7.45 acres, just west of I-270. The Shady Grove submarket is the most sought-after biotech cluster within Maryland’s nationally recognized life science market. The traditional office space will be converted to life science and lab space, with construction scheduled to begin in January 2023.
“The Shady Grove life science submarket currently has less than 1% vacancy rate, indicating that demand far outweighs supply,” said Velocis Partner Mike Lewis. “Existing lab product in the area rarely becomes available, so there are limited conversion opportunities available. This is due to building constraints and/or existing tenant encumbrances. There are also limited approved life science sites available for ground up construction. These dynamics continue to put pressure on rents, with newly delivered lab product leasing in the low $40s NNN, a nearly 60% increase since 2015.”
“This project has perfect bones for an immediate conversion to life science,” said Altus Realty Partner Al Troup. “We’ve been looking for the right opportunity within the I-270 Corridor for the past 24 months. This property possesses the base building attributes and location we think are required for an immediate transformation that will enable a speed to market in an area with strong pent-up demand for lab space. We look forward to partnering with our friends at Velocis.”
This submarket consistently ranks as one of the top life sciences clusters in the U.S. The region is home to the headquarters of many distinguished national public health research and regulatory agencies including the National Institutes of Health (NIH), US Pharmacopeia, the Biomedical Advanced Research and Development Authority (BARDA) and the U.S. Food and Drug Administration (FDA), to name just a few.
Maryland’s life sciences manufacturing sector expanded at one of the fastest rates nationwide (31%), with research and development (R&D) accounting for roughly two-thirds of total industry employment in the state according to the New Opportunities for Job Creation in Maryland’s Life Sciences Industry report released from The Milken Institute last October. The report further states that Maryland has the world’s largest cell therapy manufacturing facility and leads in global adult stem cell production and vaccine R&D, with 20% of the world’s top influencers in vaccine development operating in the region.
“A medical office was our first acquisition as a firm and a key part of our portfolio makeup,” Lewis added. “We have been looking for the right opportunity for a pure play in the life science space and feel very fortunate to acquire a true hidden gem with Research Square in the heart of the Shady Grove submarket.”
With construction starting in January, international architecture, design and planning firm, Gensler, has started blueprint drawings for the conversion.
“We are already deeply involved in the design stage to get an early jump on converting the buildings to have the right infrastructure to meet the tenant demand in this space. With high barrier-to-entry, there is an urgent need for great alternatives to keep pace with the growth demand. Research Square should deliver in a timely manner to help meet these needs and is poised for an expeditious lease up at market-leading rental rates,” Lewis noted.
Velocis and Altus Realty also partnered in 2018 to acquire Greensboro Park, a two-building 505,085-square-foot office complex at 8180 and 8200 Greensboro Dr. in Tysons, Va.
Dallas-based Velocis has been active in real estate since 2010 with a total of 50 projects located in Sunbelt markets within Arizona, Colorado, Texas, Georgia, Florida, North Carolina, Virginia, Tennessee as well as the Washington, D.C. Metro Area. Velocis is led by a team of five seasoned partners who are directly responsible for the acquisition, asset management and disposition of assets. Velocis partners include Lewis, Fred Hamm, Jim Yoder, Paul Smith and David Seifert.
Velocis is a private equity real estate investment firm active in the acquisition, operation/management and disposition of commercial real estate. Founded in 2010, Dallas-based Velocis has more than $2.5 billion of historical assets under management and has raised more than $1.1 billion of equity. With a focus on the major markets in the Sunbelt region, the company’s portfolio includes multifamily, healthcare, industrial, office and retail. The Velocis partners have over 160 years of collective real estate experience, currently leveraging their talents across multiple strategies and fund vehicles. Additional information about Velocis can be found at velocis.com.
About Altus Realty
Altus is a full-service real estate development and investment company based in Arlington, Va. From repositioning underperforming assets to developing ground-up projects, we focus on creating mixes of residential, office, retail and hospitality experiences that inspire. Our thoughtful, crafted approach to each project is guided by a strong vision grounded in the particular context of each site. We seek to elevate surrounding neighborhoods with each of our projects. Together with our investors, which range from major institutions to individuals, we are committed to building long-term relationships and value. Additional information about Altus Realty can be found at altusre.com.
This does not constitute an offer to sell, or a solicitation of any offer to buy any securities or investment advice, nor is it intended to be a description of all material factors an investor should consider before making any investment.
Tonie Auer, Sunwest Communications