Business Specialties Investments
Aug 7, 2008
By: Michael Fickes, Contributing Correspondent
CB Richard Ellis Investors has purchased Northcreek Office Park in the Buckhead community of Atlanta on behalf of the company’s Strategic Partners U.S. 5 fund. The terms of the transaction were not disclosed.
According to Real Capital Analytics, a New York City-based research firm, 29 Atlanta office properties sold for a total of $1 billion and an average price of $42 million over the last six months. Office sales in the overall Atlanta market totaled $2.1 billion over the past 12 months. The average transaction carried a cap rate of 6.7 percent and an average cost-per-square-foot of $209. In the last six months, Real Capital currently ranks the Atlanta market as the ninth most active office sales market in the nation.
Northcreek (pictured) consists of four classic brick construction eight-story office buildings totaling 533,000 square feet. The lobbies feature polished Italian marble flooring and walnut paneled walls. Recent renovations include new brick facades on all four buildings, upgraded elevator systems, extensive landscape improvements and ADA compliance upgrades. CB Richard Ellis Investors is planning additional capital improvements including roof replacements, HVAC and electrical system upgrades and surface parking repairs. In addition, the fund manager will apply to have the buildings LEED certified. The complex is currently 10 percent vacant.
According to research by Grubb & Ellis Co., the office vacancy rate in Atlanta edged over 18 percent at the end of the first quarter of 2008. The Buckhead submarket was a little higher at 18.6 percent. Even so, asking rents in Buckhead are $28.83, the highest of any Atlanta submarket. But that could change; the Grubb & Ellis research report counted 2 million square feet of office space under construction in Buckhead at the end of the second quarter. “Buckhead landlords in particular will need to be aggressive in order to secure leasing commitments--with 2 million square feet in the pipeline, tenants will be able to ‘pick and choose’ among many available relocation options," the report said.
The CB Richard Ellis Investors U.S. 5 fund consists of two limited partnerships, one focused on value-added investment and the other on opportunistic investments. U.S. Value 5 invests in value-added properties and repositions the assets, stabilizes moderate levels of vacancy and invests in controlled risk development. This side of the fund will hold the Buckhead property. The second limited partnership, U.S. Opportunity 5, repositions distressed assets with high levels of vacancy, invests in early stage development, acquires and repositions portfolios and invests in operating companies that control high-quality real estate.
Both the Value and Opportunity components of U.S. fund 5 will consider office, multi-family, industrial and retail investments. The overall U.S. fund 5 will invest $2.1 billion (leveraged to $6.4 billion) supplied by institutional investors from the United States, Europe and the Middle East.
CB Richard Ellis Investors is an independent affiliate of CB Richard Ellis Inc. A Global real estate investment management firm, the company had approximately $42.2 billion in assets under management at the end of the first quarter 2008.
By: Michael Fickes, Contributing Correspondent
CB Richard Ellis Investors has purchased Northcreek Office Park in the Buckhead community of Atlanta on behalf of the company’s Strategic Partners U.S. 5 fund. The terms of the transaction were not disclosed. According to Real Capital Analytics, a New York City-based research firm, 29 Atlanta office properties sold for a total of $1 billion and an average price of $42 million over the last six months. Office sales in the overall Atlanta market totaled $2.1 billion over the past 12 months. The average transaction carried a cap rate of 6.7 percent and an average cost-per-square-foot of $209. In the last six months, Real Capital currently ranks the Atlanta market as the ninth most active office sales market in the nation.
Northcreek (pictured) consists of four classic brick construction eight-story office buildings totaling 533,000 square feet. The lobbies feature polished Italian marble flooring and walnut paneled walls. Recent renovations include new brick facades on all four buildings, upgraded elevator systems, extensive landscape improvements and ADA compliance upgrades. CB Richard Ellis Investors is planning additional capital improvements including roof replacements, HVAC and electrical system upgrades and surface parking repairs. In addition, the fund manager will apply to have the buildings LEED certified. The complex is currently 10 percent vacant.
According to research by Grubb & Ellis Co., the office vacancy rate in Atlanta edged over 18 percent at the end of the first quarter of 2008. The Buckhead submarket was a little higher at 18.6 percent. Even so, asking rents in Buckhead are $28.83, the highest of any Atlanta submarket. But that could change; the Grubb & Ellis research report counted 2 million square feet of office space under construction in Buckhead at the end of the second quarter. “Buckhead landlords in particular will need to be aggressive in order to secure leasing commitments--with 2 million square feet in the pipeline, tenants will be able to ‘pick and choose’ among many available relocation options," the report said.
The CB Richard Ellis Investors U.S. 5 fund consists of two limited partnerships, one focused on value-added investment and the other on opportunistic investments. U.S. Value 5 invests in value-added properties and repositions the assets, stabilizes moderate levels of vacancy and invests in controlled risk development. This side of the fund will hold the Buckhead property. The second limited partnership, U.S. Opportunity 5, repositions distressed assets with high levels of vacancy, invests in early stage development, acquires and repositions portfolios and invests in operating companies that control high-quality real estate.
Both the Value and Opportunity components of U.S. fund 5 will consider office, multi-family, industrial and retail investments. The overall U.S. fund 5 will invest $2.1 billion (leveraged to $6.4 billion) supplied by institutional investors from the United States, Europe and the Middle East.
CB Richard Ellis Investors is an independent affiliate of CB Richard Ellis Inc. A Global real estate investment management firm, the company had approximately $42.2 billion in assets under management at the end of the first quarter 2008.
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