KBS has sold SouthPark Commerce Center, a four-building, 100% leased, 372,763-square-foot Class A industrial/flex park in Austin, Texas, to BentallGreenOak on behalf of an institutional investor.
“Austin is a high-growth, burgeoning industrial market that has continually led the nation in economic and population growth over the last decade and throughout the pandemic,” says Giovanni (Gio) Cordoves, Western regional president for KBS. “KBS recognized this early on, initially acquiring the property in 2005.”
Austin has been classified as a best place to live in the U.S. by U.S. News & World Report from 2017-2020. Several national publications have given the city high rankings for its job market, soaring tech salaries, nation’s high-tech hub, best city to start a business, best city to live in America and best market for real estate investment in 2020.
In addition, the Austin market attracts major tech companies such as Apple, Amazon, Facebook, Google, Oracle, and Tesla, further contributing to this ongoing growth and making it increasingly appealing to investors, notes Cordoves.
“Due to our expertise in the Austin office market, we have a hyperlocal pulse on this region,” says Cordoves. “This insight led us to acquire premier office assets 515 Congress and Domain Gateway as well as SouthPark Commerce Center and adjacent SouthTech Business Center, another high-quality industrial asset. Our recognition of this market’s potential, combined with the superior quality of SouthPark Commerce Center and our strategic management of this property enabled us to enhance its value over time.”
The industrial real estate sector has remained strong throughout the pandemic, with average rental rates increasing nationwide 4.2% since Q1 2020. While vacancies fluctuated over the last year, the overall industrial vacancy rate has decreased to 5.2% as leasing momentum and demand for industrial space continues to surge.
Built in 1998, SouthPark Commerce Center features a 24-foot clear height with 36% office finish. The property is situated inside SouthPark Commerce Business Park, one of the top business parks in the Austin market. Its best-in-class location at the southeast corner of Interstate 35, State Highway 71 and U.S. 290 in southeast Austin places the center within 10 miles of some of the largest demand drivers in the region including Austin’s CBD, Austin-Bergstrom International Airport, the University of Texas at Austin and the 5-million-square-foot Tesla GigaFactory currently under construction.
SouthPark Commerce Center is accessible to many major roadways and within a 30-minute drive of Hays County, one of the fastest-growing large counties in the nation with 47% population growth from 2010 to 2019.
The property’s ideal location is just one of the factors that has attracted numerous creditworthy tenants to it, according to Brett Merz, asset manager for SouthPark Commerce Center and senior vice president of KBS.
“KBS employed its noteworthy diversification strategy to bring a broad-based tenant roster to SouthPark Commerce Center,” says Merz. “Many global and national companies call this asset their home in the Austin market. The fact that it has been 100% leased since 2015 speaks to the high-quality of this asset and the strength of KBS’ asset management program.”
Senior Managing Directors Trent Agnew and Dustin Volz, Director Dom Espinoza and Analysts Josh Villareal and Wesley Gilmer with JLL Capital Markets represented KBS in the disposition.
“It’s hard to find an industrial property of scale as compelling as SouthPark Commerce Center in infill Austin,” says Agnew. “The asset attracted considerable attention from a wide mix of potential buyers including institutional advisors, private capital and closed-end private equity funds.”
Attorneys Bruce Fischer, Howard Chu, and Tina Ross, and paralegal, Amanda Kennedy, of global law firm Greenberg Traurig, LLP’s Orange County and Texas offices represented KBS as legal counsel in the disposition.
“We enjoyed working with KBS on the successful disposition of SouthPark Commerce Center,” says Fischer, Greenberg Traurig’s Chair of the West Coast Real Estate Practice and Co-Managing Shareholder of the Orange County Office, who led the Greenberg Traurig team.
SouthPark Commerce Center is located at 4401 Freidrich Lane in Austin, Texas.