In January 2008, an Epic Partners sponsored partnership purchased the Lumberyard Office Lofts, a modern, attractive loft office complex and one of Atlanta’s finest examples of successful adaptive reuse. Originally a single building developed for milling lumber, this property was creatively divided into three separate buildings in 2000 to offer modern, attractive office space.
At the time of acquisition, 15% of the property had been vacant since the renovation. Under Epic’s stewardship, the remaining first-generation space was leased including the addition of the Bone Garden Cantina restaurant. After weathering the great recession, the property boomed as the Westside blossomed. Even when the anchor tenant repositioned to a suburban setting after 10 years, Epic Partners was able to quickly lease the space.
In May 2018, Epic Partners received a favorable offer for the Lumberyard Office Lofts and exited the property with a 22% IRR.
We had a great run at the Lumberyard Office Lofts and will miss managing this unique property. We saw a lot happen in 10 years including one of the worst economic recessions our country has experienced. We took this opportunity to look back at the West Midtown area to see what the numbers had to say regarding average rent and sale prices for office and flex space. The results are interesting.
Unsurprisingly there was a dip in asking rent during the recession, but it is even larger than we remember. The Lumberyard was purchased right before the real estate crash. We believe the property’s desirability paired with our veteran management team allowed the property to weather the storm and remain profitable even as others struggled.
Most interesting is that while average rents slumped after 2008 then recovered by 2018, average sales price grew by nearly 50% in that same time period. This validated our original investment thesis that the West Midtown submarket was prime for growth and asset appreciation.
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