06/20/2012

CBRE Shops Suburban Dallas Office Complex

CBRE Global Investors is marketing a Dallas-area office property that could attract bids of up to $210 million from core investors.

The 1.1 million-square-foot Colonnade complex, in Addison, Texas, is 92% occupied, according to CoStar. At the estimated value of $200/sf, the buyer’s initial annual yield would be about 7%. HFF has the listing.

The offering is one of the biggest in the area since the downturn. Dallas has rebounded more slowly than many other major markets. But investment sales have been rising as improvements in the local economy and the increased availability of credit have attracted more buyers. Some $2 billion of office properties valued at $5 million or more changed hands within the past 12 months, according to Real Capital Analytics. That’s up 62% from a year earlier — double the rate of increase nationally.

The biggest trade came in January, when Atlanta-based Brookdale Group paid $226.2 million, or $162/sf, for the 1.4 million-sf Towers at Williams Square complex in Las Colinas. HFF advised the seller, TIAA-CREF.

Los Angeles-based CBRE, acting via its $1.3 billion CBRE Strategic Partners U.S. Value 5 fund, acquired the three-building Colonnade in 2008 for $170.5 million, or $173/sf, from a partnership between J.P. Morgan Investment Management and Blackstone. The capitalization rate was 5.25%. At the time, the occupancy rate was 75%. HFF was the broker.

The Class-A complex is at 15301-15305 North Dallas Parkway in the Far North submarket. The buildings, constructed between 1983 and 1998, are connected by a three-story, 70-foot-high atrium.

Major tenants include United Surgical Partners International (83,000 sf until 2020), Hilton Worldwide (52,000 sf until 2021), Palm Harbor Homes (48,000 sf until August 2013), Systemware (30,000 sf until 2017) and Source Direct, which just signed a new lease, expanding its space to 48,000 sf. The current average asking rent is $26/sf.

The 37 million-sf Far North submarket was 84.7% occupied at the end of the first quarter, exceeding the 79.4% rate for the overall 189 million-sf Dallas market, according to CBRE.

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