Premier Indy Office Campus Fetches $163M

A joint venture between Rubenstein Partners and Strategic Capital Partners acquired the asset from Duke Realty Corp.

By Barbra Murray, Contributing Editor

Parkwood Crossing, Indianapolis
Parkwood Crossing, Indianapolis

Indianapolis—Parkwood Crossing, a premier office campus in Indianapolis, has changed hands in a transaction valued at $163 million. Duke Realty Corp. sold the 1.2 million-square-foot property to a joint venture of Rubenstein Partners and Strategic Capital Partners, with commercial real estate services firm JLL providing a helping hand to both seller and buyer.

Duke tapped JLL to market the eight-building complex as part of its portfolio repositioning program—the REIT is getting out of the suburban office business and focusing on the industrial and medical office sectors. But Duke’s non-core asset is another investor’s core-property conquest.

“Parkwood Crossing drew heavy interest from the investment community,” James Postweiler, managing director with JLL, told Commercial Property Executive. “Buyer profiles ranging from private equity to stand-alone investment funds sought out this opportunity due to the ‘best-in-class’ asset quality and the option to exit in multiple ways. Even with the overall size, the fact that there were eight buildings allowed a variety of ways to arbitrage into smaller sales. Several groups were similar to the final buyer where operating companies were paired with a single money source.”

Duke developed Parkwood Crossing at the intersection of I-465 and Route 31/Meridian St. in the Carmel submarket between 1989 and 2005. Today, the property continues to hold its reputation as one of the top suburban Indianapolis office destinations, and its occupancy level—approximately 91 percent as of July 2016—tells the story. However, it’s not just the complex’s Class A designation that is a huge magnet for office users, it’s the location. The North Meridian/Carmel submarket, often at the top of the list of companies seeking to set up shop in Indianapolis, experienced the greatest number of transactions of all the submarkets in the second quarter, per a report by JLL, and recorded the lowest overall vacancy rate (8.2 percent) in the metro area.

The Parkwood Crossing package proved irresistible to lenders as well, according to JLL, which also orchestrated financing on behalf of the buyers. “The lending community was enthusiastic about this opportunity because of the premier sponsorship and best-in-class real estate within the Indianapolis market,” Keith Largay, managing director with JLL, told CPE. “The sheer size of the financing presented the only challenge. However, given the quality of the real estate, the stability of the income and the diversity of the rent roll, a number of high quality financing options were available.”

Rubenstein and Strategic Capital plan to add more luster to the already sparkling gem. The partners will build a state-of-the-art amenity center at Parkwood Crossing, and they’ll upgrade the structures’ physical systems and invest in certain cosmetic renovations.