The office investment sales market in metropolitan Dallas continues to heat up as Partners Group and Accesso find a new owner for Royal Ridge, an approximately 506,000-square-foot complex in Irving, Texas. Partners Group and Accesso sold the Class A, four-building asset to Menlo Equities for an undisclosed price.
The sale of Royal Ridge, located off John Carpenter Freeway in the highly coveted Las Colinas submarket, comes 10 years after Accesso had acquired the complex for $72.5 million. The buildings came under the joint ownership of Accesso and Partners Group at some point after 2018, when the companies became partners upon Partners Group’s recapitalization of Accesso’s 3.4 million-square-foot portfolio of eight office towers, valued at $750 million at the time.
Royal Ridge I, II, III and IV made their debut between 1998 and 2000, and range in size from approximately 103,500 square feet to 144,800 square feet. As of late April 2021, the complex was 87 percent leased with the likes of Michaels occupying the 123,700-square-foot Royal Ridge III in its entirety for its headquarters under a long-term lease signed in 2020. The Royal Ridge complex also features a 9-acre parcel of developable land that is already approved for the construction of additional office space.
Partners Group and Accesso relied on Todd Savage and Andrew Levy of JLL for representation in the sale transaction with Menlo. For its part, Menlo plans to hold Royal Ridge III and IV for its core-plus investment platform, but the commercial real estate investment firm will invest in targeted upgrades to Royal I and II in an effort to entice potential corporate tenants.
Dallas deals flow unabated
The Dallas area is a hotspot for investor activity of late, as buyers seek to pick up properties of varying class types from downtown to the suburbs, and owners appear willing to even part with high-performing assets. Recent transactions include MetLife Real Estate Investment’s acquisition of The Offices Two at Frisco Station, an approximately 210,000-square-foot property at VanTrust Real Estate’s $1.8 billion mixed-use Frisco Station in Frisco, Texas. And Dallas-based investor Ray Washburne purchased 10000 NCX, a 300,000-square-foot Class A office tower that will soon become the new Dallas headquarters of Advancial Federal Credit Union.
While the Dallas office market continues to struggle from the ramifications of the pandemic, it has an underlying strength in which investors are putting their confidence. For starters, the city is in growth mode. “Urban density is here to stay as Dallas is expected to become as big as Chicago by 2035. Dallas remains well-positioned and could experience growth dynamics similar to the 1980s energy boom,” according to a report by Transwestern.
In the nearer term, however, change is already afoot. “Changes will not happen overnight but will be accelerated through pent-up demand,” according to the report. “Transwestern estimates 12 to 15 million square feet of pent-up office demand will rematerialize when expectations about vaccine distribution solidify and revenues improve for most businesses by the fourth quarter of 2021.”
Additionally, the real estate services firm forecasts an estimated 7 million square feet of office demand from out-of-market relocations. And citing the Federal Reserve Bank of Dallas, Transwestern notes that 75 percent of local executives expect revenues to return to pre-COVID-19 levels by 2022.