Zacor Development, a Phoenix-based development company, purchased the Biltmore Fountains, a 40,000-sf office building and the lot it sits on at 2725 E. Camelback Rd. in Phoenix.

Late last year, Zacor purchased the adjacent property to the west, the Camelback Commons, which is an eight-building office park. Camelback Commons is at 2701 E. Camelback Rd.

Zacor plans to raze the existing buildings on the site and the use the land to build two, four-story, Class A office towers and an 8,000-sf retail or banking pad.

Construction is expected to begin early in the fourth quarter, after the nine buildings have been removed and the site prepared. The first phase will include a 195,000-sf office building, which is being designed by Phoenix-based DFD Architecture. That building is expected to be completed by late 2002.

The second phase of project will include a 135,000-sf office building and an 8,000-sf pad that could be used for retail or a bank location. Construction will commence based on the lease rate of the first phase.

The Camelback Corridor, which runs along Camelback Road from roughly 16th Street to 44th Street, has the most sought after office space in the Valley, typically asking and getting lease rates in the $30 range. It also has one of the lowest vacancy rates in the Valley, 6.1% at the start of the year, compared to 9.9% Valleywide. The corner of 24th Street and Camelback is considered to be the epicenter of the business world in the Valley, home to many of the top firms in real estate, finance, law and brokerage.

The supply of new office space along Camelback is hindered by a lack of available land, virtually all the open plots have been filled in the past several years. A four-story height restriction along the road, except at the intersections of 24th and 32nd streets, also hampers redevelopment efforts. Developers have built some office project along Highland, which is just a quarter mile south of Camelback, but there is no open lots remaining along there.

Less than 500,000 sf of new office space was built along Camelback in 2000.

Biltmore Fountains was sold by Bluegrass Realty of Kentucky.

The Phoenix office of CB Richard Ellis, with brokers Tom Auther, Mike Auther, Cam Stanton and Chris Ackel, represented the buyer in the transaction, while CB broker Jerry Roberts represented the seller.