Lincoln-Champion JV Grabs Dallas’ Energy Square

In the city's largest transaction this year, a joint venture of Champion Partners and Lincoln Property Co. has grabbed the 953,622-square-foot, three-building Energy Square office complex in Dallas.

November 22, 2011
By Nicholas Ziegler, News Editor

Dallas, like most markets in Texas, never saw the same slowdown as the rest of the country. Buoyed by the energy industry, the Lone Star State kept its economy afloat for the last two years – so major property deals weren’t uncommon. What is uncommon, though, is the nearly 1 million square foot deal just inked for Dallas’ Energy Square.

Champion Partners and Lincoln Property Co., in a joint venture with Long Wharf Real Estate Partners, picked up the entire 3-building, 953,622-square-foot Energy Square development from Younan Properties Inc. Jones Lang LaSalle represented Younan in the transaction. The complex, which sits in the North Central Expressway submarket of the city, currently has an occupancy rate of 82 percent.

While terms were not disclosed, Zaya S. Younan, CEO of Younan, said the assets were “sold above our purchase price and below a 7.5 percent cap rate.” Additionally, “our ability to maintain occupancy throughout this recession … is further confirmation of the increasing interest by institutional buyers in Dallas.” According to information from CoStar Group, the three-building complex sold for approximately $92 million when Younan acquired it in 2006.

According to third-quarter report by JLL, the Dallas area, while seeing a slight uptick in unemployment in August, currently stands at 8.4 percent – far below the national average of 9.1 percent. The city remains “a top metro area for job creation” and Energy Square’s 18 percent vacancy rate stands well below the city-wide office average of 22.7 percent.

Evan Stone, managing director with JLL, noted that the Energy Square sale is the largest transaction to close this year by square footage. “Despite the ongoing challenges occurring in the credit markets, the sale of Energy Square represents the largest transaction completed year to date in this market and proves there continues to be strong demand for high quality, well-located assets in resilient markets like Dallas and the Southwest,” he said.