Creative Transformation Produced a Differentiated Asset to Capture the Strong Demand from Local High-Density Office Tenants
CenterSquare and Foundry announced the acquisition of the property in December 2014, then consisting of a 194,210sf vacant office building and adjacent 130,000sf warehouse. Although situated in one of the highest job growth markets in the country, the property had been vacant for 3 years. CenterSquare and Foundry developed a plan to convert the former warehouse building to climate-controlled covered parking, in order to appeal to the deep pool of tenants actively seeking office space that offered 100,000sf open floor plates and six per thousand parking or greater. At the time, there were only 5 available properties in the Dallas-Fort Worth metro with both of these attributes. The office building also allowed for expansion of the second floor by up to 40,000sf, thereby providing additional flexibility to meet tenant demand.
"CenterSquare and Foundry identified the asset-specific flaws preventing lease up of the property and devised a solution — redevelop the warehouse into a covered parking structure, providing the office building with a parking ratio of over seven per thousand square feet," said Jeff Reder, Senior Vice President, Private Real Estate for CenterSquare. "This would transform the property from a functionally challenged commodity asset to a differentiated property, well-positioned to capture the demand premium from high-density users."
The redevelopment successfully differentiated the property, garnering tenant interest and resulting in a fully executed twelve year lease with GEICO within seven months of the acquisition. GEICO elected to expand the building, thereby adding over 34,000sf, and the property now serves as an important regional call center support office. Given the strong performance and sooner-than-expected lease up of 100% of the property, the Fund elected to pursue a sale of the property.
"This acquisition is an excellent illustration of CenterSquare’s investment strategy to creatively transform real estate for its best and highest use," said David Rabin, Managing Director and Head of Private Real Estate at CenterSquare. "We are always seeking to partner with best in class operators, identify specific local demand drivers, and creatively transform deficient assets to meet that demand."
*This Fund is closed to new investors
ABOUT CENTERSQUARE INVESTMENT MANAGEMENT:
CenterSquare is a global investment manager focused on actively managed real estate and infrastructure strategies. Founded in 1987, it operates as one of the investment boutiques of BNY Mellon Investment Management. CenterSquare manages approximately $8.0 billion of real estate and infrastructure securities through CenterSquare Investment Management, Inc. and approximately $1.2 billion (gross) of debt and private equity real estate investments through CenterSquare Investment Management Holdings, Inc. (together referred to as "CenterSquare"), as of March 31, 2017. It manages investments for institutional investors and high net worth individuals throughout global markets and across public and private capital sectors.
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Marcia Glass, CFA
CenterSquare Investment Management
(610) 818 4627
BNY Mellon Investment Management
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