top of page

One of South Korea's Largest Banks Buys Dallas Office, Retail Tower in Milestone Deal

South Korean financial giant KB Financial Group, one of the four largest banks in South Korea, has made a big buy in Dallas with a record-setting deal for the city.

The Seoul-based bank, through affiliate KB Asset Management Co. Ltd., bought The Union Dallas, an office and retail property totaling nearly 506,000 square feet, for $370 million, or about $731 per square foot. KB Asset Management purchased the majority of The Union from the seller, Phoenix-based RED Development.

The Union Dallas is located between Victory Park and Uptown, a sought-after neighborhood in Dallas. The deal takes the new title of being the priciest property per square foot in Dallas, surpassing The Pearl, a 25-story, 261,400-square-foot office tower with street-level retail, which sold for $183 million, or about $700 per square foot, last April. In Texas, the priciest office property per square foot goes to Third + Shoal in Austin that sold for $820 per square foot last summer.

"This deal shows the appetite from institutional investors and big funds for real estate in Dallas," said Susan Gwin Burks, a senior vice president in Avison Young's Dallas office, who was not involved in the deal. "Dallas has been on the radar of these large investors and we are definitely seeing more and more of these overseas capital and funds coming to our backyard."

Burks, who has been a longtime capital markets broker in Dallas, said she doesn't see another tower on the horizon set to take the title from The Union anytime soon, but the strong economy, continued growth and key land tracts in play throughout Dallas could bring another property to light in the future.

The addition of substantial retail space at The Union helped boost the per square foot price tag, since retail space is often priced at a premium compared with office space. The Union's retail and restaurant space is substantially greater than a traditional office tower with a floor of street-level retail space.

The Union includes a 21-story, 420,688-square-foot office tower at 2300 N. Field St., as well as a three-building restaurant and retail cluster totaling about 85,000 square feet at 2380 N. Field St. and a parking garage with nine levels of subterranean and above-ground parking space.

A portion of The Union wasn't part of the deal. The Christopher, a 23-story, 309-unit luxury apartment tower at 2323 N. Akard St., the fourth part of the mixed-use development, is expected to be sold separately at some point in the future once it reaches stable occupancy. The luxury apartment tower opened its doors to residents nearly a year ago in March 2019. According to CoStar data, the property is about 23% vacant.

The $370 million deal, which includes a $222 million loan and nearly $163.5 million in borrower equity, makes the 505,960-square-foot office and retail property a record-setting deal for Dallas, as some in the real estate community expected last year. The anticipated deal's closing was delayed for a few months after a former partner of RED Development filed a temporary injunction, which stalled the deal.

The two-year-old office and retail tower is 95.2% leased to 26 tenants including Salesforce, Akin Gump, Weaver and Tidwell, which accounts for nearly half of the base rent, according to a report by DBRS Morningstar. The office part of the property is 94.2% leased and has a weighted-average lease term of 9.8 years. The retail part of the property is 100% leased with a weighted-average lease term of 16.6 years, according to the report, which also confirmed the property's price tag.

The Union's largest tenant, San Francisco-based Salesforce, which occupies 104,870 square feet of office space, has a lease expiring two months past the maturity of the five-year loan, which is a little concerning, according to DBRS Morningstar analysts. However the concern is mitigated by, "the large investment made by Salesforce in its space and the consolidation of various Salesforce offices throughout Dallas into this location."

Salesforce, which leases more than 25% of the property, has two five-year extension options in its lease. The company, according to DBRS Morningstar, reportedly invested more than $200 per square foot into building out its office space at The Union. Salesforce, which currently occupies two full floors at The Union, is expected to occupy another full floor and two partial floors beginning in June 2020.

The retail and restaurant space at The Union include a nearly 60,000-square-foot Tom Thumb grocery store with Starbucks and pharmacy, as well as popular restaurants such as The Henry, North Italia, Tacolingo and Kotta Sushi Lounge. The restaurants flank a courtyard with a water fountain running through it.

JLL marketed The Union's office and retail space on behalf of the seller, RED Development. JLL did not immediately return a request for an interview.

Featured Posts
Recent Posts
bottom of page