North Dallas Office Building Sells For Half What It Did in 2017
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A 20-story North Dallas office building recently sold at a steep discount, fetching roughly half of what it did eight years ago.
The Tower at Park Lane, a 510,000-square-foot Class A office property just south of The Shops at Park Lane and across the highway from NorthPark Center, was purchased for $66 million by Colorado-based Real Capital Solutions, according to The Dallas Morning News. However, the building (formerly billed as 8750 NorthPark Central) was reportedly sold to CBRE Global Investors for more than $120 million in 2017.
Real Capital Solutions plans to spend an additional $13 million on improvements, which will include upgrades to the building’s lobby and fitness center and new suites on the third floor, Bisnow reported. The Tower at Park Lane is the company’s first office acquisition in the Dallas market.
The building currently counts TopGolf, Match.com, Harmon Home Lending, Centennial Real Estate, and Texas A&M University-Commerce among its tenants.
Developers Look to Relieve Owners of Distressed CRE
The purchase of The Tower at Park Lane is the latest in a growing trend of developers targeting financially distressed commercial properties. CRE property holders have struggled to maintain ownership of office buildings in recent years, squeezed between the growth in remote work and high interest rates. Several in Dallas have faced foreclosure. Others have moved to offload burdensome assets at bargain prices in a bid to remedy their balance sheets.
“If you get Class-A-plus at a radically decreased valuation right now because of debt equity that’s compressing it below its true net asset value, you can make a great buy,” Dallas-based developer Mike Ablon said at an industry event last month, per Bisnow.
He and Hoque Global are set to scoop up Bank of America Plaza in the Central Business District. While the sale price has not been disclosed, the office building (the tallest in Dallas) sold for $300 million in 1998. The Dallas Central Appraisal District recently pegged its value at $143 million, per D Magazine.
Real Capital Solutions CEO Adam Abeln seems to be on board with the approach, saying in a statement that the company’s acquisition of The Tower at Park Lane “reflects our commitment to strategically acquire high-quality assets at a substantial discount but with considerable upside potential in vibrant, mixed-use environments.”
“We are eager to implement our value-add approach to modernize and reposition Tower at Park Lane to win the leasing wars and create a workplace that meets the evolving needs of today’s tenants,” he added, according to DMN.
Real Capital Solutions is reportedly looking to buy up to $1 billion in distressed CRE and loans next year.
Betting Smart or Wishful Thinking?
It certainly seems like a buyer’s market in the office sector these days, but ROI is absolutely going to depend on a reversal of the remote work trend that took hold during the COVID-19 pandemic. Folks like Ablon are bullish on the prospect, even as office vacancies in D-FW continue to hover around 25%.
Some big-name employers (many in tech and finance) are leading a push to get workers back into the office, arguing that it will result in increased productivity. Amazon’s return-to-office mandate just went into effect on Thursday, and business leaders around the country are watching to see if the tech giant’s employees will comply or search for opportunities elsewhere.
Remote or hybrid work arrangements have been popular among American workers in recent years, with many even prioritizing it over salary. Despite pronouncements from companies who want their employees back in the office, a number of economists think remote work is here to stay.
“Remote work isn’t going away, but it is likely past its peak,” said economist Allison Shrivastava, who works for the job matching and hiring platform Indeed, per NBC.
Some 8% of job listings on the website reportedly touted remote or hybrid work in November 2024, a noticeable downward tick from the 10% clocked in February 2022. However, only 3% of listings advertised the perk in 2019.
