Out-of-state investors have bought a large office building at 45 Commerce Drive in Augusta that houses several state departments. The $18.5 million purchase is the largest investment transaction in the Augusta area since 2019. Courtesy of The Boulos Co.

AUGUSTA — An office building off Civic Center Drive has changed hands in a deal being billed as the largest investment transaction for the Augusta area in recent years.

The Central Maine Commerce Center, which leases space to state government agencies and other tenants, has been sold by Central Maine Commerce Center LP for $18.5 million to 45 Commerce Drive LLC.

The property includes a 317,400-square-foot building complex and parking for 1,425 vehicles on about 41 acres.

Chris Paszyc, a partner at The Boulos Co., brokered the deal, along with Greg Boulos and Dan Greenstein. Paszyc said the sale is notable because of the nationwide work-from-home trend and increased borrowing costs due to higher interest rates.

“Commerce Center presented an enticing value proposition to the investors,” Paszyc said. “This acquisition will be the buyer’s first purchase in Maine. The new owners are excited to make entry into the market, and look forward to a successful stewardship of this asset.”

Keith Luke, the economic development director for the city of Augusta, said the transaction shows compelling strength in the central Maine real estate market.

“A property that as recently as 15 years ago was worth only a fraction of that (sale) amount has now appreciated to such value that it has attracted significant out-of-state investors,” Luke said.

Digital Equipment Corp. bought the property in 1977 and completed construction of the building in 1980. Augusta property records show the property was sold to Sci Technology Inc. in 1995 for almost $9.9 million. In 2003, Central Maine Commerce Center LP acquired the building for $4.5 million.

At that time, Paszyc said, the vacant building underwent a $30 million revitalization.

The property’s sale price is a function of the net operating income of the leases on the property, Paszyc said.

“Investors will demand a certain rate of return on their investment depending on the length of term remaining on the leases, the creditworthiness of the tenants and the underlying real estate fundamentals of the asset,” he said.

Those variables include the quality of the location, the condition of the property and the number of tenants.

In this case, the building has easy access to Interstate 95 — exits 112 and 113 — and is close to the Marketplace at Augusta and state government complex.

With long-term leases in place with the Maine Department of Public Safety, Maine Department of Labor, Maine Office of Information Technology, Change Healthcare and more, the tenancy has driven an increase in the property’s value, Paszyc said.

“A takeaway from the municipal standpoint is that it’s a vote of confidence by the commercial real estate community that our market is sound,” Luke said.

The Goldman Group, based in Boston, has recently bought the Olde Federal Building in downtown Augusta, with plans to redevelop it into luxury apartments and retail space. The historic building at 295 Water St., one of the state’s finest surviving examples of Romanesque Revival architecture, was listed for sale at $2.65 million.

Luke said out-of-state investors and developers are having to look further and further outside their comfort zones for investment opportunities throughout central Maine, from Waterville to Lewiston.

“We’ve been waiting for these investors to return for a full generation,” he said, “and here they are.”

Paszyc said the last sale of a similar size was recorded in 2019, when the Maine Revenue Services and Office of Information Technology building at 51 Commerce Drive sold for almost $19.2 million.