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Miami Investor Latest In Rush To Buy Suburban Atlanta Office

A Miami investor's more than $13M purchase in Atlanta's northern suburbs is the latest in a flurry of suburban Atlanta office investments this year. 

Sugarloaf Business Center IG3
Sugarloaf Business Center in Duluth, recently acquired by Miami-based IG3 Real Estate

IG3 Real Estate purchased Sugarloaf Business Center, a 113K SF office complex in Duluth, from California-based JG Management for $13.5M, or nearly $120/SF. CBRE First Vice President Tony Swann and Senior Vice President Craig Taylor represented the seller in the deal.

Sugarloaf Business Center, on a 14-acre parcel off Satellite Boulevard in Atlanta's northern suburb, is almost fully leased, with tenants including Emory Clinic, Hire Dynamics and Credit Union Service Corp.

“Sugarloaf offered a rare opportunity to acquire a stabilized office property positioned between two major highways in an incredibly strong market,” IG3 principal Carlos Imery said.

IG3 is the latest investor in Atlanta's office scene, which has tallied more than 30 transactions totaling more than $1.2B in 2017 so far, according to data compiled by Colliers International. Properties within Interstate 285 are still commanding the top prices, but in terms of sheer volume, it is sales in the suburbs that are happening more often so far this year.

According to Colliers, more than $800M in suburban office properties traded this year, two-thirds of the transactions by dollar volume. Those sales broke out in 26 individual transactions, making up nearly 90% of Atlanta's deal volume this year.

“I think there will be fewer large/trophy assets to trade in the CBD/Midtown/Buckhead market because so much traded,” CBRE Vice Chairman Will Yowell wrote in an email. “But there will still be trades. The volumes will be less than what we saw in 2014 and 2015 because the average ticket size will be smaller.”

Jeff Shaw Bridge Investment Group Partners
Bridge Commercial Real Estate CEO Jeff Shaw

Traditional suburban office buyers are noticing an increase in competition for suburban assets as well.

“More people are paying attention to and noticing these trends,” Bridge Commercial Real Estate CEO Jeff Shaw said.

His firm focuses on buying suburban office assets in the U.S., including in Atlanta, but only properties in suburbs with strong employment bases and amenities. Bridge Commercial has bought $700M of real estate so far this year, with another $150M under contract, Shaw said. A majority are in the suburbs of major cities.

“Not all suburbs are the same,” he said. "And there are definitely suburban buildings that are functionally obsolete."

According to a recent Marcus & Millichap report, “out-of-state investors remain active, attracted to a growing workforce and first-year returns up to 100 basis points higher than gateway cities.” IG3 is certainly among those.

Aside from Sugarloaf, its recent purchases include Enterprise Mill, a 250K SF office property in Augusta; Waverly Station, a 329-unit apartment complex in Savannah; and Weatherstone Promenade, a 17K SF retail strip center in Woodstock.

Colliers noted that total transaction volume is on par, so far, from last year.

“The typical end-of-year rush on investments should help solidify another upbeat year of Atlanta office sales,” Colliers officials said.