The first Austin buy consists of the 14-story, 175,000-sf One Commodore Plaza at 800 Brazos St. in the CBD; Two Commodore Plaza at 206 E. 9th St., a 20-story, 168,000-sf CBD office building; the Exchange, consisting of two four-story connected buildings totaling 123,519 sf at 8407 Wall St.; and the nine-story, 141,727-sf Southfield at 4000 S. Interstate 35.
"We've been looking for some time to find a suitable portfolio in the Austin market," says Root. "We like that market quite a bit even though there's a softening in the tech market." And Southfield Realty LP had just what Shidler wanted; size and location. Three of the four buildings in the portfolio, situated on an aggregate 16.1 acres, are leased to the government.
The Shidler Group plans to invest $5 million to $6 million to upgrade the four properties, with One Commodore Plaza getting the biggest chunk. Up to $4 million will be invested to improve the plaza's common areas, including mechanical systems, says Root. The work will begin in 30 to 60 days, the same time period that upgrades kick into gear at the other three properties. "The properties had deferred maintenance when we acquired them," he explains. The structures had been built between the mid-1970s and late 1980s.
One Commodore Plaza is the only one in the lot that is classified as a true multi-tenant holding. The city, which occupies 8,000 sf, is the largest of the building's 55 tenants. That lease expires this summer, says Root. The investment firm also is negotiating with Enron for telecom access, which would take One Commodore's connectivity roster up to seven. Two Commodore Plaza is leased until 2004 by the state and city, with a street-level 200-sf bank office. Texas' Department of Health and Human Services holds a lease until January 2002 for the entire Exchange Building while Southfield's sole tenant, the state's Department of Workers Compensation, is good through 2002. Overall, the properties had boasted a 98% occupancy at sale time.
Meanwhile, the Shidler Group is close to finalizing a two-building buy in Houston. The properties total 275,000 sf, but Root is staying mum about the rest of the deal until it's finalized. Dallas, on the other hand, is being scouted, with the search focusing on Richardson's Telecom Corridor, Far North Dallas and Las Colinas. "We think the market's a good time to buy again in Dallas this year," Root tells GlobeSt.com. The group's last purchase had been in May 1998 when it took title to the 500,000-sf Twin Towers at 8585 N. Stemmons Freeway and 240,000-sf Atrium at Collin Ridge in Plano.
The Shidler Group owns a large and growing portfolio of commercial real estate investments in California, Arizona and Texas. The Shidler Group and Southfield Realty have used in-house negotiators to broker the Austin deal.
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