Norfolk Southern Sells HQ to TowneBank JV

The railroad company paid $32.8 million for a majority stake 22 years ago.
Arnold B. McKinnon Building

A partnership between TowneBank and Children’s Hospital of the King’s Daughters (CHKD) has purchased the Arnold B. McKinnon Building, a 310,745-square-foot office tower in Norfolk, Va. Norfolk Southern sold the property, which has been its corporate headquarters since 1988. Divaris Real Estate assisted the buyer, while Cushman & Wakefield | Thalhimer negotiated on behalf of the seller.

CHKD and TowneBank will occupy 10 floors each inside the 22-story tower at 3 Commercial Place. The partnership will implement a capital improvement plan on several floors not occupied by Norfolk Southern. WM Jordan will be the general contractor and Creative Development Partners will manage the remodeling plans.

As part of the deal, the new owners also purchased the Commercial Place Garage, a 744-space parking deck at 520 E. Main St., which also has street-level retail space. The McKinnon Building last changed hands in 1998, when Norfolk Southern paid $32.8 million to acquire the remaining 70 percent interest stake in the asset from Bank of America, Yardi Matrix shows.

Staying in place

Norfolk Southern will continue to lease space in the property for the next 18 months, as the company prepares to move to its new 750,000-square-foot headquarters in Atlanta. Construction on the 22-story tower is scheduled to wrap up in 2021. Bank of America is providing $550 million in construction financing for the project.

Back in Norfolk, Divaris will continue overseeing management and leasing efforts at the McKinnon Building. Divaris has operated the asset since 2009. The firm’s chairman & CEO, Gerald Divaris, along with President & COO Michael Divaris and Vice President Jason Oliver represented the buyers in the deal. Cushman & Wakefield | Thalhimer’s Senior Vice President Rob Wright and Vice President Geoff Poston acted on behalf of Norfolk Southern.