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DALLAS-KBS Realty Advisors, setting a three- to five-year hold into action, has acquired the 109,810-sf 2525 McKinnon in the heart of Uptown. The acquisition is purely a repositioning play with occupancy just at 61% in its recovery from a failed bid to swing the class A space to office condos.

“We love the location near all the high-profile projects in Uptown. It’s very vibrant and will be even more so in three to five years,” Bill Rogalla, senior vice president and acquisition officer for the Newport Beach, CA-based KBS, tells GlobeSt.com. “With the ability to lease up the remaining vacancy in the building, it was very attractive to us.”

The eight-story building and attached five-story parking garage is assessed at $21.96 million or $199 per sf. Word is the 0.8-acre footprint, developed in 2003, fetched in the neighborhood of its assessment, trading free and clear.

Rogalla says the closing for a KBS value fund came within 120 days of his first look at the office building and its high-profile location–across the street from the Crescent and Ritz-Carlton Hotel and two blocks from American Airlines Center and Victory Park. Transwestern Dallas managing directors Michael Hardage and Steve Simon were traveling and unavailable for comment about the asset’s drawing power during the marketing run for the Waco seller, Seneca Investments.

In late 2004, former Scottsdale, AZ-based Shea Properties jump-started an office condo conversion with occupancy at 25%. The market and existing tenants never bought into the plan.

Rogalla says there is no immediate rollover in leases. Its quoted rate for space these days is $27 per sf plus electric, right in line with the new rates for most class A’s and at least $5 per sf less than its neighbor across the street. As for renovation, only minor cosmetic changes are in store, he says.

Transwestern’s Kim Brooks, senior vice president, and Fletcher Cordell, an associate, got the leasing assignment for the newest portfolio piece, which like others in Dallas, Austin and San Antonio be overseen by KBS senior vice president Walter Foster. PM Realty Group’s local office will manage the holding.

KBS also owns 3100 McKinney in Uptown, bought about one year ago, and marked its second Dallas-are pickup this year with 2525 McKinnon’s purchase. In February, KBS acquired the 98,750-sf Parkwood Place I at 5601 Democracy Dr. in Plano.

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