Multifamily might be getting the glory as an investment vehicle, but now's also a great time to bet big on the right kind of office property in Phoenix, according to Parallel Capital Partners CEO Matt Root.
San Diego-based Parallel, in a JV with Angelo, Gordon & Co, acquired the 1M SF Arizona Center for $126M, which not only includes its prominent office towers, but also retail space, a movie theater and green space. "Phoenix is in recovery mode, and we believe Downtown will capture the economic benefits of the new cycle’s first revolutions," Matt says. Earlier this year, Parallel grabbed another big piece of the Downtown market: One North Central.
Parallel is planning to invest more than $25M to upgrade the landmark property, Matt adds. The deal allows for the development of an additional 3.9M SF to the vintage-1989 building, and the improvements and upgrades will include expanding the retail complex, adding parking facilities, modernizing elevators, and revamping landscaping and the courtyard area. Construction on the upgrades will begin in the spring. Eastdil Secured repped the seller, Equity Commonwealth—Sam Zell's company, which has been on a selling tear lately—while Parallel repped itself.
Office outside Downtown is also attracting investor attention. Another California investor, Drawbridge Realty, recently paid more than $14M to NSD Holdings for the 95k SF Grove at Black Canyon at 11001 Black Canyon Hwy. Cushman & Wakefield senior managing director Bob Buckley tells us that the property has the advantage of a history of success with high-quality tenants who take the entire building. Currently it's fully leased by Mass Mutual, and previously CIGNA occupied all of it. Cushman & Wakefield negotiated the deal.
Even buildings without the good fortune of a single large tenant are making progress toward full occupancy. The 92k SF Forum at Gilbert Ranch in Gilbert, which wasn't quite finished when recession hit, and thus sat virtually empty for years, recently bagged more than 51k SF in eight separate leases. Upon acquiring the property early this year, Denver-based EverWest Real Estate Partners tasked CBRE with marketing it. “Tenant demand for high-quality product in locations with walkable amenities continues to drive the Valley’s office market,” says CBRE's Bryan Taute, who repped EverWest in the deals, along with colleague Charlie von Arentschildt.
