Real Capital Solutions to Buy $3.5B of Discounted US Offices

Real Capital Solutions, a Colorado-based real estate investment firm, is making a bold move to capitalize on the current disarray in the US office market, as reported by CoStar.

With $3.5B in capital earmarked for investments over the next few years, the firm plans to acquire discounted office properties in major cities nationwide. 

Simple, Elegant Strategy

The firm’s strategy, focusing on all-cash offers, allows it to secure deals like its recent purchase of the Tower at Park Lane in Dallas for 45% less than the price it fetched in 2017.

The Tower at Park Lane, a 20-story office building located at 8750 N. Central Expressway, was acquired by Real Capital Solutions for $66M in cash. In 2017, the building had traded for $120.5M, a significant markdown in a city where office prices typically hover around $300 PSF. 

Real Capital’s all-cash offer gave it a competitive edge, allowing the firm to outbid other interested parties. They’re also targeting offices discounted by 40% to 70%. According to Chief Acquisitions Officer Adam Abeln, the firm sees opportunity as traditional lenders hesitate to write checks on office buildings.

Expanding in Key Markets

While the Tower at Park Lane is the firm’s first acquisition in Dallas, it marks only the beginning of Real Capital’s Texas-focused strategy. Abeln noted that the firm is targeting other growing Texas cities, including Austin and Houston. 

Additionally, Real Capital is eyeing opportunities in other US cities such as Florida, Atlanta, Minneapolis, Chicago, and California.

“We are continuing to see opportunities in Dallas, as well as other markets, with a lack of liquidity on the banking side that has caused an overcorrection of the office market,” Abeln explained. 

Behind The Purchases

Besides securing distressed office properties at a low cost, Real Capital’s primary focus is offering tenants competitive pricing and improved experiences. 

For example, the Tower at Park Lane was purchased for around $129 PSF—substantially below the Dallas market rate. This gives Real Capital the flexibility to offer reduced rents, more tenant improvement allowances, and competitive leasing commissions.

Abeln highlighted the firm’s ability to reassure tenants by acquiring buildings with solid financial backing. “Tenants are concerned about the financial health of the ownership group behind their office space and their capital stack,” he explains. “They want to lease space from a well-capitalized firm.”

Enhancing Tenant Experiences

Real Capital is also focused on upgrading the spaces themselves, hoping to enhance the overall tenant experience and attract new businesses.

For example, the Tower at Park Lane will receive about $13M in upgrades, including a new lobby, a fitness center, and speculative suites. The building’s tenants include Topgolf, Texas A&M University-Commerce, and Match.com.

Real Capital plans to meet the growing demand for move-in-ready office spaces by offering flexible lease options and improving common areas, positioning the Tower at Park Lane as a more appealing choice for office tenants in the area.

A Promising Future

With Dallas being one of the top five job growth markets in the US, Real Capital sees significant potential. Abeln also pointed out that the city has not been as impacted by the shift to remote work compared to other major urban markets, as Texas employers mostly demand in-office presence.

Real Capital’s all-cash strategy is giving it a leg up in a market where office space demand continues to shift. The firm’s ability to acquire properties at deep discounts and improve their appeal through strategic upgrades is expected to make its portfolio highly competitive in a changing office market.ns a popular brand with a loyal customer base. The company is now focused on restructuring and refocusing on its core operations while shedding underperforming assets. 

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