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AUSTIN-A private investor from Greater Detroit has lobbed a successful pre-emptive strike for the 525,000-sf Shops of the Galleria in West Austin. Sources say the first-time Texas buyer probably paid $200 per sf to $250 per sf to Lincoln Property Co. for the under-construction power center.

The seller, which is developing 1.5 million sf across the road, has retained leasing and management of the Shops of the Galleria, where there’s one pad site left to ground lease and 15% of the shop space to fill. If the timetable is held, construction will wrap up at year’s end.

Dallas-based Falcon Realty Advisors principals Tim Hughes, Scott Muller and Todd McCoy, who’s also president of Falcon Construction Advisors, asked Lincoln about nine months ago if it’d be interested in selling. “We made a phone call and one thing led to another,” Hughes tells GlobeSt.com, adding Muller and McCoy had worked for Lincoln during the 80-acre project’s planning stages.

The buyer of record is Bee Caves LP, named for the village where the “Shops” are rising. “The barriers to entry and trade area make the Shops at the Galleria a fortress asset,” says Robert Dozier, executive vice president for Lincoln Retail Group in Dallas. The just-sold property takes up the southeast quadrant of Texas 71 and FM 620 while Lincoln’s Hill Country Galleria is rising on the southwest corner. When all is said and done, the intersection will be sporting more than two million sf of class A retail.

The Shops’ development is a 100% national line-up, with names like Lowe’s, Best Buy, World Market, Old Navy and Linens ‘n Things. Sources say the inline space is quoted at $24 per sf to $26 per sf.

Hughes says the new buyer in Texas is planning to build a large portfolio for “a long, long, long term hold” of trophy and class A retail assets, keeping to the parameters of the Shops’ demographics. The plan is to acquire large properties in high barrier-to-entry locations in off-market transactions. “We are not getting into a bidding competition,” he explains. “Our job is to find and filter opportunities that will fit his business requirements. A reallocation of asset is basically what he’s doing and we’re helping to facilitate that.”

All four Texas metros are on the buyer’s radar screen. Hughes says “two or three” more properties are being evaluated while the team looks for “built or to-be built” projects that fit into the sweet spot.

Hughes won’t say what the Bee Cave retail cost. “Let’s just say Austin’s real estate is still very expensive,” he adds.

Sources agree prices vary considerably in the capital city. But based on recent sales, several sources are betting the Shops traded for the going rate of $200 per sf to $250 per sf, which factors out to $105 million to slightly more than $131 million. Since the amount of shop space drives the price, there’s a chance that the Shops of the Galleria could have brought a tad more, say sources as they cite comps to validate the ballpark price.

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