Beginning the year on a positive note, the Phoenix office of Jones Lang LaSalle completed the sale of Papago Spectrum to German-based investor GLL Real Estate Partners, reportedly for $21.6M.
According to Jones Lang LaSalle, the sale of the 159,764 SF Class A multi-tenant office building in Tempe points to continued optimism for buyer interest and activity in 2013.
“Investors see tremendous promise in the Phoenix commercial office market,” said JLL Senior Managing Director Dennis Desmond, who with Senior Vice President Brian Ackerman served as the property’s exclusive listing brokers. “We have a strong inventory of well occupied, stabilized opportunities and — for good reason — buyers from across the globe have an overarching interest in placing capital here.”
GLL was represented internally by Senior Vice President Christopher Quiett and Senior Associate Eric Ramm.
Papago Spectrum sits at the geographic center of the Metro Phoenix, at Priest and University drives, just off of the Loop 202 Freeway in Tempe. The building is 91% occupied, with the University of Phoenix taking the top two floors. Recent leases filled an additional 27,000 SF in five-year deals.
“Close proximity to Arizona State University and a strong local employment pool ensures that vacancy rates around Papago Spectrum are almost always in the single digits,” Ackerman said. “However, submarket rents are also still slightly depressed. With this building’s strong occupancy, it makes for a very stabilized core asset with solid room for improvement.”
According to JLL’s 2013 Outlook report, Phoenix office leasing velocity and stability is forecasted to improve and bring positive gains well into the first half of 2013. This is based on factors including, but not limited to:
>> A development pipeline that will remain empty as the market burns through vacancies.
>> A closing window of opportunity for securing low rents and concessions, especially in Class A properties.
>> A number of large tenants in the market, spurring anticipation for back-office and customer service-related leases in 2013.
Similar transactions by the JLL Phoenix office include the $20.8M sale of Scottsdale Centre, a 164,000 SF building on Scottsdale Rd. near Camelback Rd.; the $16.6M sale of Camelback Arboleda, a 179,751 SF, multi-tenant office building at 16th St. and Camelback in the heart of the Camelback Corridor; and the $23.3M sale of Agave Center, a 27-acre, mixed-use property at Warner Rd. and I-10 in Tempe that includes four office buildings, a flex industrial building and 4.6 acres of land ready for development.