Tyco Building Near Atlanta Sells for $30.4 Million

Costar Group - October 19, 2005

Teachers Insurance and Annuity Association (TIAA) has plunked down $30.4 million for 201 Greenwood Court, an 800,000-square-foot industrial building in Henry County that is fully leased through late 2013 to medical product maker Tyco Healthcare Group LP. The seller is Chicago-based First Industrial Realty Trust, which was represented by a CB Richard Ellis team led by Chris Riley.

The building is known to most as a former Amazon.com facility, which was the subject of much hype when the company announced in 1999 it would open its largest U.S. distribution center in Henry County. The company eventually shut the center down before it was fully operational. Tyco signed its first lease there in 2003 and expanded to take the entire building in October 2004.

With an estimated rental rate of $2.60 per square foot, the $30.4 million price ($38 per square foot) roughly equates to a cap rate of 6%. That number used to be rare in Atlanta but may become a more common sight on future sales in that range over the coming year, said Greg Ryan, vice president of investments for Atlanta-based developer IDI.

“Real estate is a steady investment and institutional buyers are becoming very aggressive when these high-quality buildings come to market,” Ryan said. “There’s been a 200 basis point fall in cap rates over the last two years and now some of the biggest markets are seeing some sales in the 5.5% range.”

In this case, Ryan said TIAA is a “wise buyer that recognizes the long-term value of real estate” and one that isn’t afraid to pay top dollar for quality assets.

Ryan said Atlanta is part of a core group of five industrial markets - the others are Los Angeles, Dallas, Chicago and New Jersey - that are in demand with institutions. He said the popularity of real estate as an investment class is starting to also effect “secondary” industrial markets like Memphis and Cincinnati as well. Sphere: Related Content