Dermody Properties has taken its first big step into ownership of office buildings in the Reno area with its purchase of a 76,800-square-foot building in South Meadows.
The building's former owner, Inter-Tel Technologies Inc., wanted out of the business of owning real estate, a direction set by its new corporate parent, Mitel Networks Corp.
"Mitel doesn't own any real estate. This gets it off our balance sheet," said Doug Gaylor, a senior vice president.
Inter-Tel occupies about 80 percent of the building at 885 Trademark Drive, and signed a 10-year lease on the building. First Health occupies the remainder of the fully leased building.
Also included in the sale was approximately eight acres of vacant land next to the building, which is available for further office development.
Dermody Properties expects to use the land for build-to-suit projects, and Dermody President Par Tolles said the build-to-suit business remains strong even as the remainder of the Reno-area office market softens.
The company doesn't have any deals in place for the land, although it's made proposals in response to several requests from organizations that are shopping for space, Tolles said.
He said the company believes the Reno office market remains attractive despite rising vacancies rates in recent months as housing-related companies cut back their operations.
Dermody Properties made its name in industrial properties, but Michael Dermody, its chairman and chief executive officer, said it would look to other types of development after the $1.85 billion sale to ProLogis of an industrial portfolio developed by Dermody in partnership with the California State Teachers' Retirement Fund.
While the office transaction marks a new direction for Dermody Properties in Reno, Tolles said it's part of the company's strategic direction nationally.
"We are being very intentional about looking at office opportunities in all of our markets," he said.
Gregg Shutt, a Dermody partner in Reno, said the Inter-Tel deal came together within about 60 days.
The company got the tip that led to the transaction, Shutt said, from Carol Martin, an executive assistant at Dermody Properties. Martin was at a social event where she heard that Inter-Tel might be looking to sell the South Meadows building after its acquisition by Mitel.
She reported back to co-workers, and they got to work on the transaction.
