Piedmont Office Realty Trust has exited its eight-year investment in the former CVS Health Tower in Irving, selling it to Capital Commercial Investments for price far below its last trade.
The Atlanta-based REIT, headed by CEO Brent Smith, recently sold the 315,000-square-foot office property at 750 West John Carpenter Freeway, Bisnow reported, citing Piedmont’s third-quarter report.
Austin-based Capital Commercial Investments acquired the 12-story property for $23 million, or $73 per square foot, marking a 54 percent discount from the $49.6 million, or $157 per square foot, that Piedmont paid for it in 2016. The acquisition was part of a package deal that included a Houston Energy Corridor office building sold at a 63 percent discount.
CCI, led by founder and president Doug Agarwal, has been buying at the bottom of the Texas office market for years. It also bought Exxon’s Mobil’s former Irving campus in 2022.
Piedmont spent $150,000 updating the lobby of the West John Carpenter building in 2017, and it spent $617,000 for interior remodel in 2022, according to state filings.
The building is 46 percent occupied, with the struggling CVS Health as one of the remaining tenants. CVS renewed its lease through 2028, but it has been reducing its office presence amid cost-cutting measures. It laid off more than 150 employees at the Irving location in the past year.
Agarwal sees opportunity in the struggling Dallas-Fort Worth office market, particularly in areas near the expanding Dallas-Fort Worth International Airport.
“There’s very little office that’s going to get built in the Dallas area until rents rise above about $10 a square foot, which we think won’t start happening for three more years,” Agarwal said in a video discussing the purchase.
He noted the broader draw of Dallas, with an estimated annual population influx of 170,000 people, has led to absorption of 6 million to 7 million square feet of office space.
Investors such as SkyWalker Property Partners and Bradford Companies. are also ramping up their investments in distressed properties across North Texas. Bradford initiated a $100 million fund last year to acquire value-add office and industrial assets, while SkyWalker established a $250 million fund aimed at distressed assets and new developments.
— Andrew Terrell
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