"It was an opportunity for us to acquire a property at a price significantly below replacement cost in a niche market," Karen Dick, executive vice president of brokerage for Ackerman and president of the Atlanta Commercial Board of Realtors, tells GlobeSt.com. "It's in East Cobb (County), which is an affluent neighborhood not accessible by the interstate, that is supply constrained in terms of office. It will always be a small eclectic market."
The Marietta/Kennesaw submarket consists of 2.1 million sf of inventory at a 15.4% vacancy rate, according to a Grubb & Ellis second quarter market report. Another 75,000-sf are under construction with average class A asking rents at $21.69 and class B asking rents at $18.69, says the report.
The 12-building Johnson Square Office Park on Johnson Ferry Road is 80% leased, mostly to medical tenants, says Dick. Other tenants include a software development company, small businesses and a few national tenants such as Great American Insurance. Non-medical leasing rates at Johnson Square start at $17.50 per sf up to $23 per sf for medical space.
The new ownership plans to reach 90% occupancy within the next year or two, says Dick. Natalie Shvenke with Ackerman will handle leasing at the property, which is also undergoing a significant upgrade, including roof replacement and other exterior improvements.
This is the first partnership between First Colony and Ackerman & Co., but the executives of the companies have had a relationship for over 25 years, says Dick. First Colony was formed by Leslie G. Callahan, who left Ackerman to form the real estate leasing, property management and development firm.
"[With this project] we were looking for a capital partner, and this is not a property that's particularly attractive to traditional institutional capital," says Dick. "It required us to look at more entrepreneurial capital."
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