Centennial Tower under contract
The 36-story Centennial Tower is under contract to an undisclosed buyer, said Mark T. Briggs, president of LNR Property Corp.'s commercial property group for the Southeast region. LNR bought the 637,006-square-foot tower, at 101 Marietta Street, in 1996, renovating it in 1999.
Briggs said he is under a confidentiality agreement and cannot disclose the buyer.
"I'm not surprised it's selling," said Russ Jobson, senior vice president at Colliers Cauble & Co. "There is so much money out there that has no place to go. This is the time to sell if you are in the market to sell."
Atlanta-based Cousins Properties Inc. (NYSE: CUZ) sold The Pinnacle and Two Live Oak office buildings in August 2004 to New York-based Teachers Insurance and Annuity Association -- College Retirement Equities Fund for a combined price of $200 million "because it's the peak of the market," Jobson said. "People are selling [office buildings] today because the prices being offered are below a six cap rate."
A capitalization rate, or cap rate, is the yield an investor would achieve on a property without a loan in place.
In the suburban markets, office buildings are selling in the $125 per square foot range, Jobson said. Cousins' properties in Buckhead sold for around $335 per square foot and One Buckhead Plaza just closed at $290 per square foot.
But Centennial Tower, built in 1974, will likely not command so high a square footage price, industry insider said.
"The trophy properties are going to sell at the high end of per square foot if they are occupied," said Alan Wexler, president of Databank Inc., which researches commercial real estate transactions in Atlanta. "If you've got a building with some age to it, it will be a lower per square foot price. If you have a class B renovated building, you are probably going to be in the $100 [per square foot] to $150 [per square foot] range."
For example, 1800 Clairmont Place, which was built in 1985, recently sold for $132 per square foot, Wexler said.
The Atlanta market has seen a recent spate of office building sales.
"A slew of buildings sold last year," Jobson said.
Of the more recent ones, Hines bought One Ravinia Drive, a 17-story, 383,606-square-foot, class-A office building in Atlanta's Perimeter Center area March 28 from Deutsche Immobilien Fonds AG.
On April 8, Crescent Real Estate Equities Co. made its second Atlanta acquisition in three months, buying One Buckhead Plaza, a a 20-story, 466,000-square-foot class-A office property for $130.5 million. The Fort Worth, Texas-based real estate investment trust (NYSE: CEI) bought One Live Oak for $31 million in December 2004 to enter the local market.