ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, October 31, 1996 TAG: 9610310023
SECTION: BUSINESS PAGE: B6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
Two partners from Chesapeake bought the historic Colonial Arms Building on Wednesday for $850,000, saying they plan to lease the largely vacant structure for offices.
Frank Waggoner and Allen Drewry, who have developed property in the Tidewater area as A&F Investors LC, were the only bidders on the 12-story building at Campbell Avenue and Jefferson Street, despite intense marketing. Their bid matched the minimum the downtown property's owner had set.
Jim Woltz of Woltz & Associates, which conducted the auction, said at least 20 serious bidders had inspected the building in advance. Eight people signed up at the auction for bidding cards, but the ante never rose beyond the minimum set by owner T.A. Carter Jr. of Salem, an architect and developer. Carter is divesting his real estate holdings having earlier this year sold his interest in two areas hotels.
Waggoner and Drewry said they bid because "we're investors. We feel like we got a good buy." Their cost also included a 5 percent buyer's premium.
They said they had an appraisal setting the value at $2 million, while the city's assessment is $2.5 million. City tax records indicate Carter paid $720,000 for the building in January 1982 and spent more than $1.5 million remodeling it, including all new mechanical systems, asbestos removal and a new sprinkler system.
Colonial Arms, built in 1927, contains about 70,000 square feet.
The building was leased by Norfolk Southern Corp. until it built its new office building, but the only current tenant is J.C. Bradford & Co., whose lease on the ground floor runs to 1998. The bidding documents indicate that Bradford pays $108,000 a year in rent.
"I can't believe someone in Roanoke didn't buy it," said Drewry, who grew up in South Roanoke. He and Waggoner said they had expected to be forced to bid higher for the property: "Where can you buy space in downtown Roanoke at that price?"
They said two or three potential tenants already had contacted them about office space. Some people had suggested that they construct apartments on at least some of the floors, but the partners said that would require too extensive a renovation.
Two realty agents, who commented only if they were not identified, said investors didn't bid because of the soft market for office space downtown.
"Just look out the window," one of them said. The view was of First Union Tower, where First Union Corp. is offering space for sublease at bargain prices.
The other said the downtown market is worse than statistics might suggest because of the large number of owner-occupied buildings such as the Norfolk Southern and Trigon Blue Cross Blue Shield buildings. But he said the new owners of Colonial Arms got such a bargain that they may be able to rent for $7 or $8 a square foot and undercut other downtown landlords.
A 1996 office space survey by Waldvogel, Poe & Cronk showed a vacancy rate downtown of 11 percent and rents ranging from about $10 to $23 a square foot. A 1995 survey by Hall & Associates, which omitted owner-occupied buildings, found a vacancy rate of 17 percent.
LENGTH: Medium: 66 lines ILLUSTRATION: PHOTO: 2 photos CINDY PINKSTON STAFF Chesapeake businessmanby CNBAllen Drewry confers with his partner, Frank Waggoner, during
bidding for the Colonial Arms Building. The Campbell Avenue and
Jefferson Street edifice sold for the minimum bid of $850,000.
color