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RICHARDSON, TX-In an off-market deal, Transwestern Investment Co. has convinced a 15-month owner to sell a 200,563-sf empty class A office building that it had primed for repositioning. Dealmakers won’t confirm the price, but local sources say the buyer has paid $115 per sf for the Galatyn Park real estate.

With the deal done, the Chicago-based buyer is readying the stage for a multimillion-dollar renovation of Lakeside Tower at 2350 Lakeside Blvd. Leasing, management and renovation oversight have been turned over to the Transwestern Dallas team of executive vice president Kim Butler and senior vice president Reid Caldwell.

Transwestern took the deed from Dallas-based Stream Realty Partners LP, becoming the fourth owner since Nortel Networks vacated the eight-story building in 2001. But, the submarket’s dynamics have changed significantly this year. Now, Lakeside Tower is the largest block of class A space in the submarket. And, it flanks a mixed-use town center with performing arts, corporate tenants like the Calabasas, CA-based Countrywide Financial Corp. and an under-construction transit-oriented development of retail and residential, anchored by a DART light-rail station.

Stream had completed a $1-million upgrade, but Transwestern is stepping in to do the heavy lifting on the 22-year-old mid-rise. All tenant spaces will be gutted and left in shell condition for marketing purposes and the lobby and other common areas will be completely renovated. “It’s an opportunity to bring like-new construction into a market that’s really gotten tight,” says Jack Eimer, president of the Central region for Transwestern. He tells GlobeSt.com that “the investment company approached Stream and Stream listened,” opening the door for Transwestern to buy its first property in Dallas/Fort Worth in three years. Last year, Transwestern sold three office buildings in the metro.

Eimer says Transwestern’s reinvestment in the market isn’t without cause. “Richardson is going through a rebirth, a lot of new development and redevelopment, particularly in Galatyn Park,” he says. “It’s an empty building but certainly competitively priced in a market showing such resiliency that they are willing to invest the extra into creating a like-new, 200,000-sf-plus building.”

Interprise Design of Dallas is crafting the redesign, getting its second large contract in weeks to map out makeovers for just-sold buildings in Richardson. Butler says demo work should start within 30 days and take several months to complete on the 6.35-acre asset. The show-and-tell campaign will target large tenants, much like Stream did, and include a plan to add to add one, maybe two floors, to the three-story parking garage so that a true 5:1,000 ratio is put into place.

“We think it makes sense for a larger user. There is a lot of activity among the larger tenants in the market,” Butler says. “The timing is right and there are limited options compared to what there was a year ago.” A Transwestern survey shows the pocket’s second-largest block of class A space is just 35,000 sf.

The city’s class A vacancy is 10%. Butler cites two recent deals and handful of others that are swirling in the market as reasoning to court large users for Lakeside Tower. Blue Cross Blue Shield has made a 114,655-sf lease at 780 Shiloh Rd. in Plano and Metro PCS has just inked a 115,000-sf lease to move into Lakeside Center at 2250 Lakeside Blvd. and vacate Walnut Glen Tower at 8144 Walnut Hill Lane. The deal was negotiated by Dallas-based Capstar Real Estate Services Inc. principal Johnny Johnson and senior vice president Trey Smith for the owner and Staubach Co.’s senior vice president Bo Bond as the tenant rep.

Butler says the marketing presentation will be put before the new owner this week to decide the per-sf rate and tenant-improvement terms. Under Stream’s reign, the asset was tagged at $21 per sf plus electric.

Although the deal came down off market, CB Richard Ellis executive vice presidents Russell Ingrum and Gary Carr steered the sale to the closing table. Stream’s team consisted of managing directors and partners Paul Moser and Robert Kennedy plus senior associate Ben Hautt.

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