CenterSquare Lands Suburban Dallas Value-Add Deal

Lake Vista 7. Image courtesy of CenterSquare

CenterSquare Investment Management has become the latest investor to capitalize on the Dallas-Fort Worth office market’s post-pandemic potential with the acquisition of a high-quality office property.

The metropolitan Philadelphia-based asset manager has acquired Lake Vista 7, a 240,000-square-foot building in Lewisville, Texas, in a joint venture with local office operator Preferred Real Estate Investments Inc.

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Located on approximately 17 acres at 2777 Lake Vista Drive, Lake Vista 7 sits roughly 6 miles from the Dallas-Fort Worth International Airport and 20 miles north of downtown Dallas within the master-planned Vista Ridge Business Park. The two-story building first opened its doors in 2008 and has been home to JPMorgan Chase since 2012. However, the financial giant will soon depart the address for its new headquarters, the 540,000-square-foot Chase Tower at Legacy West in Plano, Texas.

CenterSquare is not disclosing the specifics about the acquisition cost; however, the property has a current assessed value of approximately $32.3 million, according to Denton County records.

“The compelling opportunity for value-add investors like CenterSquare exists in assets with significant vacancy. Lake Vista 7 was placed under contract at a very compelling acquisition price,” Jeffrey Reder, managing director with CenterSquare, told Commercial Property Executive.

“Capital has continued to target Dallas for investment and, with better visibility into tenant demand for quality office space in this market as we emerge from the COVID pandemic, we have seen other vacant buildings in Dallas go under contract at more aggressive relative pricing which reflects that growing optimism and confidence.”

JPMorgan Chase’s impending relocation presents CenterSquare with the opportunity to transform Lake Vista 7 and reintroduce it to the market. The company plans to invest approximately $5 million on the repositioning of the property, converting it into a modern plug-and-lay option for either a single tenant or multiple users. The conversion will involve enhancements to a host of amenities, including conference and meeting facilities, the fitness center, wellness and dining options and indoor/outdoor collaboration and entertainment spaces. CenterSquare expects to complete the renovations at Lake Vista 7 in the second quarter of 2022.

Bullish on the office sector—still

A bevy of investors have been plucking up office properties across Dallas-Fort Worth, sanguine about the market’s future. According to a second quarter report by Avison Young, DFW has seen an increase in office demand, with companies from outside of the state searching for a business-friendly environment. The trend has led to the area attracting more than 50 companies from outside the state since the first quarter of 2020, resulting in 7,400 new jobs since the start of the COVID-19 health crisis.

CenterSquare’s confidence in the pandemic-weakened U.S. office market, however, extends beyond Dallas. While the company is well aware of the challenges that remain as a result of demand uncertainty, it is not prepared to sit on the sidelines in terms of investment goals. CenterSquare is making careful observations at the macro level and moving forward.

“We have insights into what characteristics tenants are focused on for their office space and how the pipeline of tenant demand for office space is evolving and recovering from the COVID-19 pandemic. This gives CenterSquare the data we need to have conviction in what office acquisitions we will pursue to deliver compelling risk adjusted returns for our investors,” Reder said.

“We expect to be quite acquisitive through 2022, with the goal of building diversified portfolios of assets for our investors that we believe benefit from macro trends as well as market and asset specific fundamentals.”