CBRE Strategic Partners U.S. Value 6 continues adding to its holdings with the purchase of Signature Place I and II, a 437,363-square-foot, two-building, Class A office property in the Far North Dallas submarket of Dallas.
The fund, sponsored by Los Angeles-based CBRE Global Investors, acquired the eight- and 11-story buildings constructed between 1983 and 1986 from DRA Advisors. The price was not disclosed. Located at 14755 and 14785 Preston Road, the 10.12-acre property also includes an adjacent four-level parking garage.
The office buildings, located about five minutes from the Dallas North Tollway, are 77 percent leased. Tenants include EMC, the law firm of Wright Ginsberg Brusilow and insurance companies Summit Alliance and Combined Group.
“Signature Place is a perfect fit with our fund’s strategy of acquiring high-quality assets that are underperforming and repositioning them,” Vance Maddocks, president of Strategic Partners U.S., said in a news release.
CBRE Global Investors is planning a capital improvement program of more than $5 million to reposition and improve the property, a spokesperson told Commercial Property Executive. Projects will include replacing the roofs, upgrading bathrooms, corridors, HVAC and elevators. The team will also implement the Five Star Worldwide amenity package and seek LEED certification, the spokesperson added. The improvements are expected to address current vacancies and near-term rollover risk.
A CBRE leasing team will market the newly renovated property, focusing on smaller tenants similar to the current roster.
“We anticipate that as fundamentals continue to improve, capital will shift to ‘Next Tier’ markets like Dallas, which is expected to see significant improvement in absorption and rental growth rates over the next five years,” Maddocks said.
Dallas is one of several U.S. cities that are seeing office vacancy rates drop because of “diminished availability, particularly for Class A space,” according to preliminary second-quarter data from CBRE Group Inc, which looks at the 13 largest markets in the United States.
“Continued job growth and minimal new office development is leading to tighter conditions in most major U.S. office markets,” Brook Scott, CBRE’s Interim Head of Research, Americas, said in a release about the second-quarter market conditions.
Dallas is expected to have a vacancy rate of 18.7 percent for the second quarter, down 30 basis points from 19 percent for the first quarter of 2013, according to the report.
CBRE Global Investors closed the fund in December with equity commitments of almost $1.1 billion from 22 institutional investors. It is expected to have total purchasing power of $2.7 billion. The fund is targeting value-added returns through investments in institutional-quality properties across major metropolitan markets, including existing office, multi-family, industrial and retail assets.
The fund made its first hotel acquisition in May, buying the San Jose Marriott for a reported $80 million to $85 million. The 28-floor hotel has 506 rooms and is attached to the San Jose Convention Center. Other acquisitions announced in May included 3 Ravinia, an office tower in the Atlanta area overlooking I-285 and the Perimeter Mall purchased for a reported $144.3 million and two multi-family communities, Dunwoody Place, also in the Atlanta region, and The Connection at Buffalo Pointe in Houston. The purchase prices on the multi-family properties were not available.
CBRE Global Investors is a global real estate investment management with $90.7 billion in assets under management as of March 31. It is an independently operated affiliate of CBRE Group, Inc