Real estate investor Chris Dornin, who buys financially troubled buildings in states slammed by the recession, has inked another deal in Las Vegas.
Dornin recently bought City Centre Place, a six-story, 104,000-square-foot office building downtown, for $21.5 million from lenders who foreclosed on the property and then sold it through Auction.com.
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The sale, at a steep discount from a decade ago, closed Jan. 8, county records show.
Dornin’s purchase is a bet that Las Vegas’ office market, arguably the most-struggling aspect of the valley’s commercial real estate sector, has better days ahead, especially downtown, where there is far more demand for space than in other parts of the valley.
Southern Nevada’s office market, vastly overbuilt by speculators during the bubble last decade, has a 20 percent vacancy rate and average asking rents of $1.89 per square foot.
Within that, downtown’s vacancy rate is 14 percent, the lowest of any submarket, though average rents also are $1.89, according to Colliers International.
Dornin said his group is leasing other buildings he bought locally the past few years, and that City Centre is a high-quality property in possibly the best submarket in the valley.
“We just felt like it was an opportunity we couldn’t pass up,” Dornin said.
Downtown fares better because government agencies and law firms cluster there. Despite its location, though, City Centre has more empty space than the average building in town.
At Fourth Street and Lewis Avenue, City Centre is 71 percent occupied, according to lender and investment firm PCCP, which says it gave Dornin’s group an $18 million loan to help it buy the building, do interior work and pay commissions to leasing agents for the remaining space.
Dornin attributed the high vacancy rate in part to its past status as a foreclosed property.
Built in 2002, City Centre was sold in 2004 for $29.5 million but was seized through foreclosure in 2013, property records show.
Dornin’s purchase price, even before adjusting for inflation, was 27 percent below what the building sold for a decade ago.
The new landlord launched his namesake Dornin Investment Group in 2011. Based in Laguna Beach, Calif., and with a satellite office in Las Vegas, his company buys real estate in Nevada, Arizona, California and Texas, often at discounts from the boom years. Dornin said the portfolio includes distressed properties and buildings that are almost fully leased.
All told, he has acquired more than 600 residential properties and 2 million square feet of commercial space in the past five years, according to his company’s website.
The City Centre purchase wasn’t his first foray into the valley.
Since entering the market a few years ago, his group has bought a lender-owned, three-building commercial property in the southwest valley that was just 45 percent leased; a three-story office building in Summerlin that was 67 percent occupied; three office buildings near McCarran International Airport that were 76 percent leased; and a pair of medical-office buildings in Henderson that were 93 percent occupied.