"I'm not sour on Dallas," Lee Elman, president and CEO of Elman Investors Inc., stresses to GlobeSt.com. In fact, he claims the 206,860-sf ex-Nortel Networks building at 2350 Lakeside Blvd. in Richardson, now in the hands of Granite Properties, could have been saved from foreclosure if Japanese lender UFI, the predecessor to Sanwa, had been more willing to play ball with the plan presented for a replacement tenant.

While Dallas-based Granite was working toward foreclosure, Elman Investors was nearing the closing for a 100,000-sf office building at 8001 N. Stemmons Freeway, which is fully occupied by First Tennessee on a net lease basis. Elman confides the property, leased through May 31, 2005, was bought for the opportunity to lease it down the road to its specialty tenant, the General Services Administration, the deal maker for all federal contracts. Since 1995, Elman Investors has built a national reputation for its ability to corner state and federal government leases.

Elman paid $5.9 million to Dallas-based Renco Ltd. for the Stemmons asset in a deal negotiated by Thomas Clarke in Grubb & Ellis Co.'s Dallas office. The purchase gives Elman two buildings in the immediate neighborhood, a cluster strategy that he likes to employ when eyeing to buy. He says the INS leases 7701 N. Stemmons. The investor has a four-building package in Washington, DC and seven in Seattle-Tacoma. As for Texas, he's looking for more in Dallas-Fort Worth and talking for some in Austin.

According to Elman, the Telecom Corridor building had two strikes against it: the loss of Nortel as a tenant and failed talks to land Blue Cross/Blue Shield as a replacement. He says he put a plan in UFI's hands that would have dedicated $8 million to $9 million in TIs to help snare the insurance carrier. "If the lender had played ball, we could have saved it," he says. Then, the carrier downsized its requirements from 156,000 sf to 135,000 sf to make the deal financially impractical and triggering a chain of events that led to the foreclosure. For previous story, click here.

The new owner wouldn't confirm the price, but knowledgeable sources say Granite got the building for about $7 million. The plan is to rehab the building and reposition it for multi-tenant use. Bill Brown, Granite's senior director of investments, says the changes will be done over the next four to five years, ample time for the Telecom Corridor to recover from the downturn in high tech and re-emerge, with diversification, as a primary landing ground for office tenants.

Obviously, a single tenant would be ideal, but for now the class B-plus building will be mothballed, Brown tells GlobeSt.com. Andrea Peskind in the Dallas office for Cushman & Wakefield of Texas Inc. brokered the note's acquisition.

Elman alleges Sanwa was directed to sell the property. Brown wouldn't confirm that, but did say "we knew we were going to buy the note and have to deal with the situation.