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As the central Texas office market continues to recover from the effects of the coronavirus pandemic, global investment giant KKR has sold an eight-building office campus in northwest Austin that is home to a variety of businesses.
The acquisition of Riata Corporate Park by a global institutional investor is valued at more than $ 300 million, according to KKR.
KKR paid around $ 258 million to purchase the property in late 2019. KKR said the deal is expected to close in the coming months.
KKR declined to say who is buying the office campus, but news service Bloomberg reported that the buyer is a subsidiary of Starwood Capital Group, citing someone with expertise.
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Riata, which was built between 1998 and 2000, is a 688,100 square foot campus on 51 acres between US 183 and West Parmer Lane.
The campus at 12331 Riata Trace Parkway is located on a rapidly growing technology corridor in northwest Austin. Nearby, Apple’s $ 1 billion Parmer Lane campus is expected to employ up to 5,000 people initially and up to 15,000 over time when completed in 2022.
Riata is fully let and is inhabited by tenants who include publicly traded companies as well as a mix of technology, financial services and healthcare companies. Current tenants include Accenture, Allergan, the Advisory Board Company, Sonic Healthcare and Zynga.
“Our long-term focus on high-quality properties in great locations in attractive growth markets has led us to invest in Riata, a technology-oriented office campus in one of the most desirable cities in the country,” said Roger Morales, KKR Partner and Head of Real Estate Acquisition.
KKR bought Riata from Partners Group, a global private markets investment manager, and Accesso Partners, a Florida-based real estate investment manager. These two companies bought the property in 2015 for an undisclosed price.
When KKR co-acquired the campus with Endeavor Real Estate Group in 2019, it announced a $ 11 million capital improvement program.
Since purchasing the property, KKR has modernized the fitness center, coffee shop, landscaping, outdoor facilities and other features of the property. KKR said it also worked with Endeavor to complete the delayed maintenance.
“We are proud of the real estate and capital improvements made under our property in a very successful pre-pandemic office investment,” said Morales. “Riata, one of three 50 acre office parks in northwest Austin, is well positioned to continue benefiting from net migration to the Sunbelt cities as companies strive to provide a great work environment for their employees.”
The transaction marked the first investment in Austin property by New York-based KKR, which had approximately $ 32 billion in real estate assets in the United States, Europe and Asia as of June 2021.
The sale comes as demand for Austin office space rebounds after most companies closed their offices amid the pandemic.
A recent report from JLL Capital Markets, the Worker Preference Barometer, found that “an increasing number of employees are suffering virtual burnout and seeking the structure, engagement and collaboration gained from working in an office will”.
In JLL’s office market outlook for the second quarter, the company said falling unemployment rates, rising consumer spending, greater mobility and improved vaccination rates all add to the pent-up office needs.
In the area’s office market as a whole, “JLL sees a record level of rental activity focused in Austin and we remain optimistic through 2022, 2023 and beyond,” JLL’s Brent Powdrill told the Statesman earlier this month.
The American reporter Shonda Novak contributed to this report.
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