Will the US Bank Center Hit the Sales Block?
US Bank Center owner Parallel Capital Partners has no plans to sell the iconic Downtown Phoenix office tower tomorrow. (So you can go ahead and stop using that as an excuse to not make a dentist appointment.) But that may change in 18 months with market fundamentals on the upswing.
The building certainly has a lot going for it, with recent leasing successes and a $3M renovation. Parallel Capital Partners' Matt Root tells us it's recently renewed 100k SF in deals, including Valley Metro Rail for 57k SF, Xerox for 32k SF, and Jacobs Engineering Group for 20k SF—leases that help keep the building at 70% occupied. The renewals and renovation free up the top four floors of US Bank for lease as marquee space, he says. (He should take an office there if his company is making him do his work on a bridge.)
And while capital is hot for Phoenix real estate right now, Matt says it's premature to sell US Bank. “The Phoenix office market recovery is starting to gain traction right now,” he says. And rents are starting to pick up. So between that, an improved leasing environment, and the gentrification of Phoenix's CBD, there's a chance Parallel could put the tower on the market in the next 18 months to capitalize on the value play, Matt says. (Our mother's always told us to be patient because patience leads to... we never stuck around to hear the end of that.)
But that doesn't mean Parallel isn't already looking to reap the benefits of Phoenix's improved real estate market. The San Diego firm has Black Canyon Corporate Center up for sale and is actively in talks with a potential buyer that would see the nearly 220k SF building at 16404 N Black Canyon Hwy trade for a mid- to high 7% cap rate, Matt tells us. And Parallel is still in the market for more in Phoenix on the acquisition, with a few deals in the works. “It's a market we want to be long-term. As the market picks up momentum, we think the office market will benefit.”