Margollas Buys Athlete's Foot HQ for Below Replacement

ATLANTA-In what local industrial brokers tell GlobeSt.com is the deal of the year to date, Sol Margollas, president of Atlanta-based Margollas Realty Group, has picked up Athlete Foot Corp.’s prime 162,651-sf headquarters office and warehouse property. The asset is located in the fast-growing suburb of Kennesaw, GA. Margollas paid $5 million or $30.74 per sf.Area brokers and builders familiar with the property and the 11 million-sf Kennesaw business park submarket explains that the $30.74-per-sf-price is below the estimated $50-to-$60-per-sf replacement cost of a comparable property. The building sits on 15.5 acres at 1950 Vaughn Road.”We were fortunate to have the right players in the right place at the right time,” Margollas says. “We always look at the bottom line before we ever go look at a property.”As part of the deal, Athlete’s Foot will sign a two-year lease for half of the building’s office space or 23,244 sf. The building houses the company’s administrative offices and showrooms. Athlete’s Foot will also sign a six-to-12-month lease on the 116,162-sf warehouse component.Margollas is confident he can have the building fully leased in 18 to 24 months. He says that while the asset could be subdivided easily, he hopes to find a single tenant for the warehouse. He bought the 12-year-old property from Kennesaw-based TAF Real Estate LLC. Peter Greyling and Ernie Baker, vice presidents at Atlanta-based Richard Bowers & Co., negotiated for Margollas. Rusty Epperson of Wilson, Hull & Neal represented the seller. Tom Butsch, a senior vice president at Regions Bank, financed the acquisition.The building has 116,162 sf of warehouse space and 46,489 sf of office. The property was offered first in 2002 and remained on the market for more than two years in a submarket with a vacancy level of 15%.The average asking base rent at Barrett Office Park, where the Athlete’s Foot building is located, is about $3.7 per sf for warehouse space and $9.5 for office, according to Richard Bowers. For the Kennesaw submarket generally, the average rent is between $7.5 and $8 per sf. Margollas Realty Group owns and operates a mixed portfolio of office, retail and industrial properties throughout the Southeast. Athlete’s Foot Corp., founded in 1971, claims to be the world’s largest retailer of athletic footwear with 750 stores in 45 countries.