Parkway Closes $167.3M Purchase

Located in the heart of Atlanta's Buckhead district, Parkway's new purchase is comprised of the commercial segment--470,000 square feet of office space and 20,000 square feet of retail--of the 50-story building that is also home to Sovereign, the 82-unit luxury residential condominium component occupying 23 floors of the skyscraper.

January 25, 2011
By Barbra Murray, Contributing Editor

Parkway Properties Inc. touted the attractiveness of Atlanta’s Buckhead office submarket upon releasing news in December 2010 of its planned acquisition of 3344 Peachtree Road from Regent Partners L.L.C., and now its faith in the area–and the asset–have been reaffirmed. Acting on behalf of Parkway Properties Office Fund II L.P., the REIT just closed the $167.3 million acquisition of the 490,000-square-foot office and retail property, where the occupancy level has increased four percentage points to 97 percent in less than a month.

Located in the heart of Buckhead, Parkway’s new purchase is comprised of the commercial segment–470,000 square feet of office space and 20,000 square feet of retail–of the 50-story building that is also home to Sovereign, the 82-unit luxury residential condominium component occupying 23 floors of the skyscraper. Regent developed the property, which includes an adjacent 11-story parking facility, in 2008 at a cost of approximately $250 million.

Parkway’s acquisition, however, includes only the office and retail space and accompanying parking structure at the Smallwood, Reynolds, Stewart, Stewart & Associates-designed tower. The roster of over 25 tenants includes such names as Barclays and commercial real estate services firm Jones Lang LaSalle, which marketed 3344 Peachtree on behalf of Regent.

Parkway president & CEO Steven Rogers noted that the company is a believer in the long-term investment value and performance of Buckhead, as well as 3344 Peachtree. He added that the leasing percentage has increased from 93 to 97 percent since the announcement of the sale in December.

Parkway owns another Buckhead property, the 410,000 square-foot One Capital City Plaza just steps away at 3350 Peachtree, which, according to advertised space availability on the company’s website, is over 90 percent occupied. The average occupancy level for Class A space is 75.5 percent in Atlanta, excluding the suburbs, and 71.2 percent in Buckhead, as per a fourth quarter 2010 report by commercial real estate services firm Richard Bowers & Co.

Parkway’s new addition to its portfolio brings more than trophy office space. The purchase price included the assumption of the $89.6 million first mortgage, featuring a 4.75 percent fixed interest rate and a scheduled maturity date in October 2017.