Starwood venture buys US offices for US$1.12b

A joint venture including an affiliate of Barry Sternlicht's Starwood Capital Group agreed to buy a group of suburban office properties in the United States from Duke Realty Corp for US$1.12 billion.

The deal comprised 62 buildings with 6.9 million sqft of space combined and 23 hectares of undeveloped land, Indianapolis-based Duke said in a statement.

The Starwood venture includes affiliates of Vanderbilt Partners and Trinity Capital Advisers.

"This transaction is a continuation of our strategy to increase our focus on bulk industrial and medical-office properties and reduce our investment in suburban office assets," said Denny Oklak, Duke's chairman and chief executive.

Demand for office space outside US cities is increasing as the economy grows. Vacancy rates for suburban offices dropped to 16.3 per cent in the fourth quarter and occupancy gains reached 26.9 million sqft, the most since 2006, Maria Sicola, the head of Americas research for Cushman & Wakefield, said in a January report.

Duke's sale included the company's wholly owned suburban office properties in Nashville, Tennessee; Raleigh, North Carolina; South Florida and St Louis, the statement said.