By james art Nearly eight years after purchasing the Irving office building once known as the CVS Health Tower and making nearly $800,000 worth of interior renovations, Piedmont Office Realty Trust has sold the property for less than half its purchase price to a well-known buyer of stalled offices.
The office building at 750 W. John Carpenter Freeway in Irving was 46% leased at the time of the sale.
Piedmont acquired the 12-story, nearly 315K SF office building at 750 W. John Carpenter Freeway in 2016 from Columbia Property Trust for $49.6 million, according to Commercial Property Executive. During the eight years of ownership, the company has made extensive upgrades, including $150K in renovations to the building’s lobby in 2017 and $617K in interior remodeling and office space expansion in late 2022, according to permits filed with the Texas Department of Licensing and regulation.
But despite the huge investment, the property sold for $23 million earlier this year, according to Piedmont’s third-quarter investor report released this week.
County records show the building was sold to Austin-based Capital Commercial Investments in what the company called a value-add investment. The just-reported sale was completed in July as part of a package deal that also saw CCI pick up a Houston Energy Corridor office building for a 63 percent discount from the previous purchase price.
750 W. John Carpenter was approximately 46% occupied at the time of the transaction, according to Piedmont filings.
One of those tenants is CVS Health, which renewed its lease through 2028 two years ago. But Rhode Island-based CVS has been in cost-cutting mode since the summer of 2023, laying off more than 150 employees at the Irving facility as well as one in Richardson last year as part of a restructuring effort. This month, the company announced a $2 billion cost-savings initiative that will cut the workforce by another 2,900 jobs after cutting roughly 5,000 last year.
The layoffs have led to office closings elsewhere, CoStar reported, but in a YouTube video discussing the sale, CCI founder and president Doug Agarwal said two current tenants are in talks to expand, while a long list of others have expressed interest, including UPS, Siemens, Topo Chico, Waste Management and Mars Inc.
CCI, which has become known for snapping up vacant and distressed offices, also purchased the 290-acre former Exxon Mobil campus across the street in 2022.
“There is very little office that will be built in the Dallas area until rents rise above about $10 per SF, which we don’t think will start to happen for another three years,” Agarwal said of CCI’s rationale. “The most important thing about Dallas is that it absorbs 6 million to 7 million SF of inbound migration of 170,000 people a year.”
Irving’s property was last assessed at $35 million, with about $12 million of that in land value, according to a listing on the Dallas Central Appraisal District website.
Office availability across the region remained elevated in the third quarter, and a study by Switch on Business found that Dallas has about 53 million SF of vacant office space.
Still, there is a growing list of distressed office buyers, including CCI, betting on the sector’s revival.
In addition to Gulf Coast Western and Enverra Real Estate Partners, which bought a pair of Dallas office towers last month, SkyWalker Property Partners and Bradford Cos. work to clean up troubled office buildings.
Last year, SkyWalker launched a $250 million fund aimed at acquiring distressed assets and new developments in Texas and beyond.
Dallas-based Bradford Cos. launched a $100 million fund in April 2023 to take advantage of the market downturn by acquiring value-added properties in North Texas. This fund was created to target industrial and office assets emerging from the challenges of the capital markets.