CB Global Innovative Partners Buys 240,000-SF Granite Tower

Gregory P. Fuller, Granite's managing director in Dallas, tells GlobeSt.com that the final price "is indicative of what is selling today...good tenants in a quality building are fetching the highest dollar in the marketplace." The read on Granite Tower is a 99%-leased, 10-story building with a rent roll extending beyond 2010.

Carreker Corp.'s headquarters fills three floors at 4055 Valley View Lane in Farmers Branch and Home Interiors & Gifts headquarters fills another three floors. At sale time, there was just 2,000 sf sitting empty--a sure sign that the buyer more than likely doubled the building's $23.3-million assessment by the Dallas Central Appraisal District.

The sale comes four years after Granite sold the Centre at 4100 McEwen to DalCan, a Dallas-based joint venture backed by deep-pocketed Canadian capital, and once considered to be the most likely buyer for the four-year-old office building. But, Fuller says, that plan didn't work out so the building went to market, without an ask and without debt. CB Richard Ellis Inc.'s Gary Carr and Russell Ingrum brokered the sale to the Los Angeles buyer, whose acquisitions partner on the deal was Chris Kenney.

Granite bought the Centre in 1993 along with the land for Granite Tower, which launched the firm as a developer in Dallas. Fuller says Granite intended from the onset to sell the tower, but wanted it stabilized before turning it loose. "There is always some sentimentality of letting it go," he says, "but we're in the investment business not the sentiment business." Capstar Commercial will be assuming leasing and management duties for the property.

Ed Frieze, research director for Holliday Fenoglio Fowler LP in Dallas, says investors of all types are getting the Big D's deeds at prices below the national average yet still delivering high returns for those willing to sell. Class A suburban office product in Dallas is selling on the average for $165 per sf with a 7.6% cap rate, Frieze says, citing the National Real Estate Index. The national average is $180 per sf and an 8% cap rate.

According to Real Capital Analytics, the last 12 months have brought $1.2 billion in sales for 13.2 million sf in 58 office buildings in Dallas/Fort Worth with the average transaction working out to $20.8 million or $91 per sf. But, Granite Tower is far from average, particularly with a 99% occupancy.

Frieze says it undoubtedly closed in the "upper band" of sales, the $150 per sf to $170 per sf range. Nearby class A office buildings like the 325,000-sf Galleria Tower North II roped $51 million or $157 per sf and the 303,000-sf Addison Circle sold for $51.5 million or $170 per sf. Slightly farther away, but definitely peers in quality, the 352,000-sf Millennium got $149 per sf or $52.5 million; Lincoln Place, $171 per sf or $51 million for the 298,000-sf design; and the 395,000-sf Premier Place, $139 per sf or $55 million.

Frieze is likening the times to the early 1990s. "There are lots of opportunities," he says.