News
KBS' Drastic Measures
June 22, 2010
| Relocations and downsizing triggered one of the area's largest building owners to take extreme action, lowering its rental rates up to 23% across its 5.6M SF DFW portfolio, KBS Realty Advisors' senior veep Walter Foster tells Bisnow. | |
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| Meeting with us at the firm's Millennium Tower in Addison, Walter highlighted the property's lovely amenities, namely PM Realty assistant manager Dana Leighton and SVP Lisa Johnston (oh yeah, and the building, too). Buildings have a natural cycle, Walter says in a Zen moment: “You're going to lose tenants from time to time and you have to refill them.†Currently, the KBS push is on the Dallas North Tollway and Uptown, Walter tells us. “We want to be competitive and make as many deals as we can.†To that end, three months ago, KBS lowered its rates. | |
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| The lower rent has greatly increased KBS's deal flow and RFPs, he says. Millennium Tower, above, will lose several tenants this year and others are downsizing at renewal. In response, KBS is adding $500k in amenities with a conference center and full-service fitness center that will open in a month. "Our main response to a competitive industry is to appeal for business with a good location and economy of pricing,†he tells us. | |
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| KBS's properties in Plano are fairly stable with an occupancy of 90% or higher, but when deal flow is down, Walter says he listens to his leasing managers. “In February, Hilton relocated its HQ to CBRE's Colonnade from Providence Towers, above, leaving a big chunk of space there,†Walter tells us. “That was a trigger for our move.†He says once a building hits about 94% occupancy, KBS will re-evaluate the price point on a building. The result? Transwestern's Justin Miller recently inked 22k SF in leases for KBS across Parkwood Place, Providence Towers, 14800 Quorum, International Plaza III, Pacific Center I, and The Shops at Promenade. | |
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| KBS is always in the market to buy and sell. It's in escrow to sell Gateway Tower, above, which the company has owned for 12 years. A 221k SF complex at 300 N. Coit Rd. is also on the market. It includes the 15-story 132k SF Compass Bank Building office tower and the 132k SF Promenade Center retail/mixed-use part of the complex. There may be other building sales listed in the second half of the year, he adds. “In this market, we've been selling the buildings we've owned for longer periods of time.†While we couldn't get confirmation from Hines (the seller) and KBS (the buyer), Crain's Chicago Business reported Monday that the sale of 300 North LaSalle in Chicago was pending for $625M, which (if so) will make it the largest sale in the Chicago market since the Willis (formerly known as Sears) Tower in 2004, when it sold for $840M. |
