DALLAS-Archipelago Learning Inc. has inked a 10-year lease at One McKinney Plaza for the bi-level space formerly occupied by Bally's Health Club.

The publicly-traded, subscription-based online education company, which boasts with two subsidiaries, Study Island and Northstar Learning, will move into its 37,218-square-foot space August 1. The new lease drove building occupancy to 94%.

Gaedeke Group LLC, owner of the 256,543-sf high rise at 3232 McKinney Ave., is in the process of "white boxing" or returning the two-story space to shell condition to ready it for Archipelago's build-out.

Archipelago is nearly doubling its headquarters space from 3400 Carlisle St. It searched for its new home for eight months, focusing on Uptown and triggering fierce competition among class A building owners in the submarket for the rapidly growing, creditworthy tenant, according to Gianni LaBarba, senior vice president in Dallas for CresaPartners.

LaBarba, who represented Archipelago in the deal, says the lease is one of the largest ones signed this year in the Uptown corridor. Part of One McKinney Plaza’s allure is the $5 million renovation it is undergoing.

LaBarba says One McKinney Plaza's selling points were the renovation, amenity base and the retail and restaurants within walking distance of the 15-story building. "There also weren't too many buildings in Uptown that had the parking and growth opportunities that 3232 McKinney offered with the Bally's space," he adds. "It gives Archipelago the opportunity to grow without piece-mealing space."

Bally's vacated the bi-level space in July 2009. Gaedeke decided to backfill the space with a traditional office tenant despite interest from several other fitness operators, according to Belinda Dabliz, vice president of leasing for Dallas-based Gaedeke. The former health club space boasts two elevators and two interior stairwells plus features a separate entrance, effectively creating a private class A building for Archipelago.

"It was a highly coveted deal,” Dabliz says. “The competition was very tough on this deal.”

The former health club's swimming pool will be filled in and converted into green space as part of the $5 million renovation, the first major overhaul since the high rise's completion in 1986. Gaedeke also has redesigned the McKinney Avenue entrance to enlarge the lobby and is modernizing elevators in the office building and parking garage, adding new landscaping and installing a security kiosk with a state-of-the-art monitoring system.

Technology upgrades will add Wi-Fi access, an electronic tenant directory and controlled-access gates for tenant parking. One McKinney Plaza holds an Energy Star designation and is now working through the LEED Existing Building certification process.