"We just think that submarket's getting stronger and stronger. This is the better asset in that market," says David Pettle, executive vice president for Dallas-based Lincoln. "And the purchase price relative to the replacement cost, we got a good deal." He tells GlobeSt.com that the 15-story building would cost $250 per sf to duplicate in today's market. The polished-granite tower has a four-story underground parking garage and two-story royal mahogany lobby. Dallas Central Appraisal District has a $21.85-million assessment levied against the 2.1-acre asset.
A partnership, led by Houston-based Means Knaus Partners, put the asset on the market in late September--without an ask. John Alvarado, managing director of Jones Lang LaSalle led the sales team, which included managing directors Jack Crews and Evan Stone and analyst Seth Bame.
Alvarado says 20 written offers went on the table. "The interest was extremely high. The market recognized it was easily the most compelling, value-add office sale for 2007," he says. The would-be buyers were institutional capital and high net-worth private investors. "Lincoln had the best terms that allowed us to do a fast closing by year end," he adds.
Means Knaus bought the building in May 2005. Nine months later, its lead tenant, Unitrin Business Insurance, disclosed it was going to move its headquarters to 140,000 sf at Park Central 7 and Park Central 9 in August 2006. It wasn't until just recently that the first major backfill surfaced: Seattle-based Milliman Inc., which took two floors with roughly 43,000 sf in a seven-year lease.
With the change in owners, Peloton Real Estate Partners of Dallas will stand down and Lincoln's team will move in to lease and manage the building. "We think they've done a good job leasing it," Pettle says, adding the 21-year-old building will undergo some cosmetic upgrades as part of the value-add plan. Although the pricing hasn't yet been firmed up, he says the opening quote most likely will be $19.50 per sf to $20 per sf plus electric.
Alvarado credits the asset's proximity to Presbyterian Hospital, NorthPark Mall and the under-construction Park Lane as being the closer. "The market saw in the long term that this location would no nothing but improve," he says.
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