A German investment fund is paying the highest price ever for a Dallas office building.
Union Investment Real Estate of Hamburg is paying more than $200 million for the 21-story 2000 McKinney tower, which fronts on Klyde Warren Park and is across the street from the Ritz-Carlton Hotel.
With a sales price of more than $500 per square foot, the pending Uptown purchase raises the bar for office investment prices in Dallas.
Some of the recent Dallas office sales are setting a new price point, said Andrew Levy, senior managing director with HFF.
“In the past 12 to18 months, the Uptown and downtown Dallas have emerged as primary targets for institutional capital – both foreign and domestic,” Levy said. “The pricing of any property is going to ultimately be based on the unique merits of that particular asset.”
An office tower at 2100 McKinney last year traded for about $450 per square foot. And the One Victory Park tower on Stemmons Freeway just sold for about $400 per square foot.
In 2012, the Encana Oil & Gas tower in Plano was purchased for $375 per square foot.
Downtown Dallas’ 55-story Chase Tower just sold for an estimated $220 per square foot.
“Dallas has really transitioned into a primary market for core institutional capital this cycle,” said Greg Kraus, managing director with investment adviser Invesco Real Estate. “That’s very good for the long term health of the market.”
The 9-year-old 2000 McKinney building is almost fully leased to major businesses, including Texas Capital Bank, Benchmark Title and Lincoln Property Co
Lincoln Property and a foreign investment group that own 2000 McKinney hired Eastdil Secured to market the high-rise to potential buyers.
With rents for new office towers in Uptown topping $50 square foot, the area north of downtown is one of Texas’ most expensive real estate markets.
“New benchmark pricing in Uptown is also reflecting the new realities of high construction costs and the rising valuation of land in urban environments,” said John Alvarado, senior vice president with commercial real estate firm CBRE.
The new McKinney & Olive office tower across the street from 2000 McKinney is 90 percent leased.
Union Investment Real Estate of Hamburg is represented in its U.S. purchases by Metzler Real Estate of Seattle.
The company owns properties in 24 countries and has spent more than $20 billion on real estate since 2007.
Last year Union Investment and Metzler paid $440 million for a 36-story office skyscraper in downtown Houston.
Metzler previously owned an office tower at Dallas’ Galleria north of LBJ Freeway.
Representatives with Union Investment and Metzler did not respond to requests for details about their 2000 McKinney purchase.