KDC Buys 1 MSF Office Portfolio

Park Center Buildings 2 and 3. Image courtesy of KDC

Corporate developer and investment firm KDC acquired two Class A office buildings totaling more than 1 million square feet in the north Atlanta suburb of Dunwoody, Ga. The company purchased the properties in a sale-leaseback deal with State Farm.

Park Center Buildings 2 and 3 were originally developed by KDC as part of its 17-acre Park Center. Leased by State Farm, the two buildings include nearly 40,000 square feet of retail space. A 4,223-space parking structure and a 2.56-acre parcel for future development were also included in the acquisition.

The master-planned, transit-oriented, ground-up corporate office project reportedly was the largest of its kind in metro Atlanta’s history at the time it got underway.

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Park Center 2 has 621,000 square feet of office space along with 39,152 square feet of retail space and was completed in 2020. Park Center Building 3 totals 440,000 square feet and was completed in 2021.

The buildings are located on 12.2 acres at Hammond Drive and Perimeter Center Parkway, adjacent to the Dunwoody MARTA station.

KDC began Park Center with Park Center Building 1, which was completed in 2016 and totals 620,000 square feet.

In a prepared statement, KDC President Toby Grove noted that the company has developed two campuses for State Farm: Park Center and also the CityLine development in Richardson, Texas.

KDC funded the acquisition using its internal capitalization, which was established with the investment by Cadillac Fairview in 2021, along with ongoing ownership and funding from KDC and Compatriot Capital.

A Dallas-based Northmarq debt/equity team of Phillip Askew, Ronald Reese and Charlie Robinson arranged financing for the acquisition through its life insurance company relationships.

KDC has undisclosed plans for future phases of Park Center.

Time to slow down

Metrowide, the Atlanta office market has a total vacancy of 21.4 percent, as a result of a surge in deliveries larger than anything in two decades—2.0 million square feet—and despite positive absorption, according to a third-quarter report from JLL.

The sublease market is quite active, with high availability and also with a dozen large blocks of Class A sublease space having been taken so far this year, for a total of about 400,000 square feet.

Class A office space in the northeast suburban submarket has an overall vacancy of 18.1 percent, on an inventory of about 8.1 million square feet, also according to JLL.