A Los Angeles real estate firm is buying a group of Austin office properties for $1.15 billion, in what is believed to be the biggest commercial real estate deal ever in Texas.Thomas Properties Group Inc. has put under contract Austin office buildings including the Frost Bank Tower, 300 West Sixth Street, three other downtown properties and five suburban complexes.

Once the sale closes, Thomas will be Austin’s biggest office landlord, with more than 3.4 million square feet of space.

“One deal at a billion dollars — I would be hard-pressed to come up with anything bigger,” said Tim Hendricks senior vice president in the Austin office of Cousins Properties Inc., which built and manages the 33-story Frost Tower.

Many of the area’s most prestigious office buildings are about to be sold for the second time this year, and the chain of transactions likely won’t end there. As a result, commercial real-estate brokers are warning businesses to brace for higher rental rates.

Beacon Capital Partners, a Boston real-estate investment company, will become the area’s largest office landlord when it buys a portfolio once owned by Equity Office Properties Trust in Chicago. Equity Office was sold last month for $39 billion to New York’s Blackstone Group. Blackstone now is selling the Seattle-area portfolio for an undisclosed amount to Beacon Capital, which in turn plans to sell 15 of the 29 properties to the Archon Group of Irving, Texas, say people familiar with the negotiations.

COMMERCIAL REAL ESTATE NEWS

• AMB Property of San Francisco, which owns and develops industrial real estate, said Friday that it would sell as many as 9.1 million new shares and plans to expand its global development business by 75 percent over the next four years. The company will use the funds to acquire properties, repay debt and for general corporate purposes, AMB said in a regulatory filing. The company owns or has interests in 124.7 million square feet of distribution space in 12 countries, the company said. AMB shares fell $1.23, or 2 percent, to close at $61.18. They gained 19.2 percent in 2006 and are up 4 percent so far this year.

COMMERCIAL REAL ESTATE NEWS

• Blackstone Group, the private equity firm that bought Equity Office Properties earlier this month in the biggest leveraged buyout ever, agreed to sell 17 of Equity’s former buildings in the San Diego area to closely held Irvine Co. for an undisclosed sum. The buildings sold to Irvine have 2.1 million square feet of suburban office space. The highest sales in suburban San Diego have averaged $428 a square foot, according to Real Capital Analytics. That would value the sale at about $900 million. Blackstone has also sold 61 buildings in New York City, Washington, Seattle and Portland, Oregon, since taking over EOP, leaving it with about 400 buildings.

A bubble is forming in the country’s commercial real estate market as prices rise to increasingly lofty levels, says Washington Post columnist Steven Pearlstein.

So far, the prices have yet to scare away pension funds, foreign investors, and college endowments. These investors have continued to funnel large sums of money into REITs, private equity real estate funds, and hedge funds that specialize in real estate finance.

But, Pearlstein points out, the Blackstone Group’s recent acquisition of Equity Office Properties Trust is indicative of bubble conditions vulnerable to a downturn. That’s because 80 percent of the $36 billion deal will be financed with debt and the capitalization rate is an estimated 5.5 percent.