The office market in Metro Phoenix is experiencing a surge in demand for owner/user deals. In the past six months, approximately 55% of all office sales have been sold to an owner/user. The two-year historical average has hovered around 36%, according to CoStar. A deal in Gilbert, closed by NAI Horizon, offers further proof of this continuing narrative.

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Owner/user sale statistics are a macro-representation of the business-friendly climate within Metro Phoenix. The market continues to see a trend of businesses moving here or expanding to reap the benefits of the Valley’s labor pool, favorable tax structure, and economic benefits — and they often acquire commercial real estate to support their expanding footprint.

NAI Horizon Gilbert deal details

Senior Vice President Don Morrow and Vice President Dylan Whitwer were entrusted with representing The Commerce Insurance Company, in the $10.58 million owner/user sale of 1555 N. Fiesta Blvd., in Gilbert. Within six months, the NAI Horizon team was able to open escrow with a qualified buyer, closing the sale shortly thereafter.

The buyer, Graduation Solutions, will occupy the entire second floor of the building, which will serve as its corporate headquarters. Graduation Solutions is a dropout recovery program that has assisted more than 3,000 students in online programs.

As is often the case in the Phoenix market, Graduation Solutions was facing a rapid-growth trajectory and will be expanding from its former 10,100-square-foot building in East Mesa, to the 29,000-square-foot, second floor. Woodside Homes, the 28th largest homebuilder in the U.S., occupies the first floor of the building. The buyer was represented by Julie Hance with Rick Brandt Real Estate.

“What we’re hearing from our clients is that Phoenix is different,” Morrow says. “The Valley is a prime location for business expansion and attraction with many companies wanting to be here for the talented and deep labor pool, and to serve our rapidly growing population.”

When the building was first listed, it attracted an immediate interest from value-add investors, who would profit by dividing and leasing out the second floor. However, to capture the highest value for the asset, Morrow and Whitwer strategically rebranded the asset as an owner/user opportunity.

Interest quickly picked up and attracted the attention of multiple buyers, which ultimately led to selecting Graduation Solutions.

“Utilizing our personal databases, Real Capital Markets, and other marketing tools, we were able to make over 14,000 individual touchpoints to qualified owner/users, fellow commercial brokers, and value-add Investors alike, ultimately leading to a successful sale,” Whitwer says.

This sale, along with other recent owner/user sales in the Phoenix market, supports the continued theme that Metro Phoenix and its commercial real estate market present all of the tools necessary for a business to grow and thrive.