Dual Telecom Corridor Sale Marks Buyer's Return

"Corrigan," says its broker, Keith Fisher of Dallas-based Stream Realty Partners, "was really looking for an opportunity to exit to focus on their core business." In a 60-day start to finish, Corrigan has been freed to concentrate on retail and the Pearson Group has picked up its second DFW asset and the challenge of repositioning a single-tenant building in one of the hardest hit office submarkets in Dallas-Fort Worth.

The class B-plus package includes the 51,430-sf 1111 Digital Dr., an office flex property equally split and locked down for the long term to Avaya Inc. and SED International Inc. The sister asset, 1100 E. Campbell Rd., previously occupied by Perot Systems Corp., is a 65,090-sf building that's going to be retooled for multi-tenant use. About $8 per sf to $12 per sf will go into the makeover to develop suites for 1,000-sf to 5,000-sf users, Craig Nemec, president of the Pearson Group, tells GlobeSt.com.

Pearson is in the process of shifting its headquarters from Dallas to Austin while its scouts shop the state for office and industrial holdings at the right price. Nemec says the Telecom Corridor package was definitely priced right for the buyers--closing in the mid-$30 (per sf) range. "We're down-market buyers," he says of a push that got under way late last year to pick up deeds in the DFW, Austin, Houston and San Antonio. Before the year's over, another $40 million of assets will be added to the rebuilt portfolio of a nine-year-old company backed by individual equity players.

Since third quarter 2002, Pearson Group has acquired the 75,000-sf Atrium at Willow Chase at 8203 Willow Place South in Houston's northwest corridor; 550,000-sf Western Auto distribution center in Temple, of which part was leased back to the auto parts dealer and the balance is going to multi-tenant use, including 266,000 sf to Artco-Bell, an educational furniture manufacturer and supplier; 50,000-sf Lonetree Shopping Center in Victoria, TX; and 350,000 sf in three office buildings in Tulsa.

From 1994 to 1997, Pearson bought Texas office and industrial assets, then took a breather until last fall. Until the Telecom Corridor transaction, its DFW assets had dwindled to the 92,000-sf Park Forest at 3534 Forest Lane in the LBJ Freeway submarket of Dallas.

Nemec isn't expecting the Telecom Corridor building to quickly fill. But, the in-house team will start hitting the pavement in 60 days in search of names for the marquee. "Our job there isn't going to be easy," he says, "but I think we can be successful if we apply ourselves."

Stream's Fisher says Perot's lease expired around November 2002, with the two-building portfolio coming to market for $5.5 million at the start of this year. Four offers, all close, were put on the table.

In addition to Fisher, Paul Moser of Stream negotiated for Corrigan. Eliza Solender of Solender/Hall in Dallas brought the deal to Pearson, which closed the purchase with a three-year loan at about 6% interest from its capital pool at North Houston Bank.