Orleans

Hertz enters market with $30 million downtown buy

October 31, 2005

By Lisa R. Brown

A California-based real estate investment firm that went on a buying blitz in New Orleans in recent years has turned its focus to St. Louis, snapping up the Bank of America building downtown for about $30 million.

Hertz Investment Group, based in Santa Monica, Calif., spent $155 million from 2002 to 2005 in New Orleans, buying four high-rise office buildings. The company owns about 10 million square feet of buildings nationwide.

The acquisition of office space in New Orleans made Hertz Investment Group the owner of a quarter of the city's Class A office space in a span of less than three years.

This month, the company bought its first office building in St. Louis, the 22-story Bank of America Tower at 100 N. Broadway from Irving, Texas-based Archon Group. Hertz's President and Chief Executive Judah Hertz said it won't be the last. Bank of America is its largest tenant, with a lease for 260,000 square feet in the 490,000-square-foot building.  

Gary Horwitz, chief operating officer and chief financial officer for Hertz Investment Group, said within the last two years Bank of America renewed its lease, which had been set to expire in 2008. "They signed for the long term," Horwitz said. Union Pacific leases 18,000 square feet in the Bank of America Tower, and more than 100,000 square feet is vacant. "We feel we can definitely get some new leasing in that building in the short term."

Hertz said he became familiar with St. Louis real estate through Pres Kabacoff, chief executive of HRI Properties, which has offices and developments in both St. Louis and its headquarters city of New Orleans. "This is our first building in St. Louis," Hertz said. "I am going to be looking for other buildings there."

Hertz typically buys office buildings in central business districts. He said the Cardinals new Ballpark Village and the renovation of historic buildings for residential use in downtown St. Louis impressed him. "There's a lot happening there, and I'd like to be a part of it."

Paul Hilton, vice president and principal of Colliers Turley Martin Tucker, brokered the Bank of America Tower transaction, which closed Oct. 19.

Kevin Bittmann, senior vice president at CB Richard Ellis, said first-time office buyers in the St. Louis market are increasingly making additional purchases. "Once they get established, adding additional properties becomes attractive because of the economies of scale and because they become comfortable with the market."