Harkinson Investment Corp. Makes Major Office Buy In Richardson
An Addison-based real estate investor just made its first major office purchase in decades.
Harkinson Investment Corp. acquired the 229K SF Tower 2600 office building at 2600 N. Central Expressway in Richardson from Orlando-based Deven Group, a subsidiary of Kajima Corp. from Japan. The purchase of the nine-story Class-A building is Harkinson's largest office investment in more than 25 years, according to a press release from the firm.
Company executives said the time was right for the deal because they believe the office market has reached an inflection point where Class-A assets like Tower 2600 can be acquired at prices that would have been hard to imagine a few years ago. Financial details of the deal were not disclosed.
Harkinson’s last big office asset was a 285K SF tower at 4455 Lyndon B. Johnson Freeway in Farmers Branch that it sold in 2015.
"For more than a decade we've been patient," Harkinson President Jeff Harkinson said in a statement. "Rather than chasing office investments through the peak of the market, we focused on sectors where we believed the risk-adjusted returns were stronger.”
The current environment is very different, as Harkinson said, premier buildings in outstanding locations are trading at historically attractive valuations.
Leasing gains in Class-A office properties have contributed to rising rental rates in the metro, according to the latest market report from Colliers. Overall asking lease rates in Dallas-Fort Worth were up nearly 6% year-over-year during the first quarter.
Tower 2600 was built in 1999 and has received more than $10M in capital improvements since 2020. The building was 92% leased at the time of the deal, with a 5.2-year weighted average lease term.
Since the beginning of 2022, more than 205K SF of leases have been signed or renewed in the building.
"Nearly the entire building has effectively been re-leased since the pandemic,” Harkinson said. “Combined with the continued strength of Richardson's Class A office market, it gave us confidence that employers are still willing to commit to high-quality space in the right locations."
The tower is in Richardson’s Telecom Corridor along U.S. Highway 75 just south of the CityLine mixed-use district. Engineering and design firm Kimley-Horn is the building's largest tenant.
Newmark’s Gary Carr brokered the deal, and the firm’s capital markets team represented the seller. Acquisition financing was provided by First United Bank.
Forge Commercial Real Estate will be retained to handle leasing of the building’s remaining available space, as the firm helped increase occupancy from around 50% during the pandemic to its current level. Forge Commercial will also continue to provide on-site property management services.
Harkinson owns and operates around 1.5M SF of retail, office, industrial flex and medical properties throughout Texas.
