DALLAS-Lincoln Property Co., acting on behalf of a major state pension fund, has bought the 252,000-sf Guaranty Bank Building in Preston Center, getting a 4.4-acre tract with room to add 500,000 sf in a supply-constrained submarket. Sources say Invesco Realty Advisors Inc. banked “north of $35 million” from the sale.

With the 8333 Douglas Ave. deed filed away, Lincoln’s reviewing all options, including a rehab of the 27-year-old landmark. But, there’s no rush to decide on a purchase definitely ticketed for a long-term hold. “We will continue to evaluate the market and asset and do what makes sense when it makes sense,” David Pettle, executive vice president for Dallas-based Lincoln, tells GlobeSt.com.

Lincoln, which leased and managed the asset for Invesco, has occupancy at 94%. Lead tenant, Guaranty Bank, occupies more than half of the class A space. Pettle says the bank’s headquarters lease has another 8.5 years on the term and “there’s no near term rollover risk” on the balance. What is available is on the market for $22 per sf to $24 per sf plus electric.

The locally based Invesco bought the Preston Center linchpin in December 1997 for one of its clients. Holliday Fenoglio Fowler LP’s Dallas team of Barry Brown and Jim Batjer debuted the listing four months ago without an asking price. “It was very competitive. We had over 30 offers,” Brown says. “There was a group of top bidders…a very tightly packed group at the top.”

With occupancy and rental rates leveraging the offering, Brown credits the tract’s build-out potential with seeding the sale because there are only two other developable tracts in the submarket and both have “limited development” possibilities. “At some point, I’m confident we’ll have high-rise residential there,” he says.

Preston Center has 3.7 million sf of office space, mostly class A, in its bounds. At the Q2 close, it was the only submarket on Dallas’ side of the metroplex with a single-digit vacancy, 9.4%, according to CB Richard Ellis Inc. Rent-wise, Preston Center’s average of $21.42 was the second highest, just 67 cents shy of the lead set by Uptown/Turtle Creek properties. And the Guaranty Bank Building is “at ground zero,” Pettle says about its relationship in the high-demand, supply-constrained office pocket. “And, it’s probably the most recognized building in the submarket.”

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