Riata Corporate Park in Northwest Austin sells in $300 million deal – Austin American-Statesman

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Riata Corporate Park in Northwest Austin sells in $300 million deal – Austin American-Statesman

As the Central Texas office market continues to bounce back from the impact of the coronavirus pandemic, global investment giant KKR has sold an eight

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As the Central Texas office market continues to bounce back from the impact of the coronavirus pandemic, global investment giant KKR has sold an eight-building office campus in Northwest Austin that is home to a wide array of companies.

The acquisition of Riata Corporate Park by a global institutional investor is valued at more than $300 million, according to KKR. 

KKR paid about $258 million when it purchased the property in late 2019. KKR said the transaction is expected to close in coming months.

KKR declined to say who is buying the office campus, but Bloomberg news service reported that the buyer is an affiliate of Starwood Capital Group, citing a person with knowledge of the matter.

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Riata, which was built between 1998 and 2000, is a 688,100-square-foot campus on 51 acres between U.S. 183 and West Parmer Lane.

The campus, at 12331 Riata Trace Parkway, is in a fast-growing technology corridor in Northwest Austin. Nearby, Apple’s $1 billion Parmer Lane campus is expected to employ up to 5,000 people initially when finished in 2022, and up to 15,000 over time.

Riata is fully leased and occupied by a tenants that include publicly traded companies along with a mix of technology, financial services and health care businesses. Current tenants include Accenture, Allergan, the Advisory Board Company, Sonic Healthcare and Zynga.

“Our long-term focus on high-quality properties in great locations within attractive growth markets led us to invest in Riata, a tech-focused office campus in one of the country’s most desirable cities,” said Roger Morales, KKR partner and head of real estate acquisitions.

KKR purchased Riata from Partners Group, a global private markets investment manager, and Accesso Partners, a Florida-based real estate investment manager. Those two firms purchased the property in 2015 for an undisclosed price.

When KKR acquired the campus in 2019 along with Endeavor Real Estate Group, it announced an $11 million capital improvement program.

Since purchasing the property, KKR said it has upgraded the property’s fitness center, café, landscaping, outdoor amenities and other features. KKR said it also worked with Endeavor to complete deferred maintenance.

“We are proud of the property and capital improvements delivered under our ownership in what has been a very successful pre-pandemic office investment,” Morales said. “Riata, one of three 50-acre office parks in Northwest Austin, is well positioned to continue benefitting from the net migration to Sunbelt cities as companies seek to deliver great live-work environments for employees.”

The deal was the first investment in an Austin property by New York-based KKR, which had real estate assets of about $32 billion across the U.S., Europe and Asia as of June 2021. 

The sale comes as demand for office space in Austin is bouncing back after most companies closed their offices amid the pandemic. 

A recent JLL Capital Markets report, the Worker Preference Barometer, found that “increased numbers of employees are experiencing virtual burn out and (are) seeking the structure, engagement and collaboration gained from working in an office.”

In JLL’s second-quarter office market outlook, the firm said that declining unemployment rates, rising consumer spending, greater mobility and improved vaccination numbers are all contributing to pent-up office demand.

In the region’s office market overall, “JLL is seeing a record amount of leasing activity focused on Austin, and we remain bullish going into 2022, 2023 and beyond,” Brent Powdrill of JLL told the Statesman earlier this month.

American-Statesman reporter Shonda Novak contributed to this report.

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