Atlanta Suburbs Get Some Office Investor Love

The I-85 North corridor has shown positive leasing momentum and is benefiting from significant new investment in multiple development projects and community improvement districts.

ATLANTA—Expanding its Atlanta portfolio beyond retail commercial real estate , Rothenberg-Rosenfield , a multi-generation, private real estate firm focused on long-term investment acquisitions, has acquired over 700,000 square feet of service-oriented office space . The Gwinnett County grab is the firm’s largest flex office and industrial acquisition to date. Oakbrook North includes 11 buildings on 50 acres along Oakbrook Parkway in Norcross, GA. Rothenberg acquired the property from Sperry Equities for $36.6 million, or about $52 per square foot. Reinsurance Group of America provided financing. “With this asset, we identified irreplaceable real estate that is well located and easily accessible to Interstate 85,” says Josh Rosenfield , director of property acquisitions at Rothenberg. “While we continue to pursue retail real estate investment opportunities, we expect Oakbrook North to deliver financial returns that current retail offerings cannot match in the near-term.” Oakbrook is 74% leased with 60 tenants including American Megatrends, PulteGroup, and YesVideo. Rothenberg is renovating vacant suites, creating open floor plans that feature fewer individual offices. David Nash of Nash Commercial Real Estate is the exclusive leasing representative “In our opinion, the property has been under-managed, under-funded and suffered from a profusion of deferred maintenance that ultimately resulted in occupancy below what we believe is achievable in the near future,” says Rosenfield. “We also expect to offer amenities for the tenant employees that improve the work-life balance, in addition to the existing fitness center and community conference room.” Rothenberg purchased the asset at well below the replacement cost and at a significantly lower price point than recent, comparable office acquisitions. For example, Blackstone Group acquired a 675,000-square-foot, Gwinnett office portfolio for $41 million, or about $61 per square foot. And Gwinnett Corporate Park, a 1.2 million-square foot business park located two exits north of Oakbrook North at Beaver Ruin Road, reportedly sold for more than $70 per square foot. A redevelopment plan will infuse $1.5 million into the property to immediately address its physical needs, including parking lot repairs, additional exterior lighting, both exterior and interior sign upgrades, enhanced landscaping, tree maintenance, pressure washing and painting. “This acquisition fits into the scope of our Atlanta portfolio,” says Rosenfield.  “The flex office product type has been overlooked as a viable investment asset type, but we foresee increased demand and low supply in the near term that will provide for rental rate, occupancy and asset appreciation across metro Atlanta.” With the addition of Oakbrook North, Rothenberg is now operating over 1.2 million square feet of commercial assets in Atlanta. The firm also owns Marietta Trade Center in Marietta, GA and Centennial Village in Roswell, GA. The firm’s national portfolio now tops 2.3 million square feet of commercial and residential properties in Colorado, Georgia and New York City, valued at $250 million. “ Atlanta’s office market continues to attract investment capital, both domestic and offshore, due to the positive population and job growth metrics,” Will Yowell, vice chairman at CRE, tells GlobeSt.com. “Businesses are finding the Atlanta market offers a deep talent pool, and hence are expanding their businesses. This expansion combined with limited new construction is producing significant rent growth in the office sector, and hence very attractive risk adjusted returns.” Join the conversation on April 28 for RealShare ATLANTA, the metro’s premier CRE event. Click here for details and to register.