ST. LOUIS—As reported in GlobeSt.com, KBS Real Estate Investment Trust III has recently made some big investments in the St. Louis metropolitan area including the recent purchase of 101 S. Hanley, a 346,451-square-foot tower in suburban Clayton, from Duke Realty for $62.25 million. And KBS officials tell GlobeSt.com that all this interest has a relatively simple explanation.
“It all boils down to Clayton,” says Brett Merz, senior vice president of KBS. “We're very familiar with Clayton and it's a great office environment with good fundamentals.” The Newport Beach, CA-based KBS already owned two other major properties in the small city just west of St. Louis: Plaza in Clayton, a 325,172-square-foot office tower; and Pierre Laclede Center, a two-building office complex.
The suburb has attracted many brand-name businesses over the last few decades and it has a few unique attributes that gives groups like KBS a lot of confidence in its future. “It's always performed well,” Merz says, even during the recent downturn. In the near future, he expects that the gathering recovery will strengthen Clayton even more.
Furthermore, Clayton has a 24/7 vibe that office tenants want to experience and the surrounding area has great demographics. “If you look at some of the other institutional owners who have bought there,” he adds, “you'll notice that it has attracted national attention.”
But even with all of Clayton's strengths, Merz says KBS can help make it even better. For example, although tenants occupy slightly more than 90% of 101 S. Hanley, he says planned improvements will help retain existing tenants and bring in new ones.
“The previous owner took great care of it,” Merz says. But “our goal is to make it the most modern work environment in Clayton” and help improve employee retention and productivity.
The tower already has an on-site coffee shop and deli and a restaurant. KBS officials plan to add a new fitness center and design a new conference lounge with an outdoor patio. They will also modernize the lobby and elevators and update the building's entrances, select common area corridors, and restrooms.
Merz believes they will finish the new improvements in the next twelve to fifteen months. But KBS typically holds its properties for a five- to seven-year period, so although no decisions have been made, a sale in the near future is unlikely.
But future purchases in Clayton are at least a possibility. “We're constantly looking for opportunities,” Merz adds, “especially in submarkets we believe in.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
