Greeley, CO-based Bataa Oil Inc.'s buy is a four-story, 109,800-sf office building at 7047 E. Greenway Parkway in the master-planned community of Kierland. The price equates to nearly $200 per sf.

Bataa Oil has sold about $50 million of oil wells to another major oil company. In a 1031 exchange, a portion of the proceeds is financing real estate buys, Eric Wichterman, an investment broker in the Phoenix office of Grubb & Ellis Co., tells GlobeSt.com.

"This is one of the most prestigious locations," says Wichterman. "North Scottsdale and the Camelback Corridor have the most attraction for investors." The building is in an upscale master-planned community and adjacent to a 750-room Westin Resort, which is under construction. It's also near the Kierland Commons, an upscale retail power center, boasting such tenants as Morton's Steakhouse, Anne Taylor, Cheesecake Factory, J. Crew, Sharper Image and Restoration Hardware. The neighborhood also is home to the 27-hole Kierland Golf Club.

Kierland Corporate Center had been 96% occupied at sale time, with a lease pending that will fill it completely. Its tenant roster includes Honeywell, Gillette and AIG Aviation Insurance.

Phoenix-based Butte Properties is the seller and property developer. Ed Lewis, Jill Clements and Andy Holloran are the firm's principals. Butte also built the Kierland Fairways Office Plaza, which it sold it last year for nearly $200 per sf.

In addition to Wichterman, the Grubb & Ellis team for the seller included Stanton A. Shafer and Charles W. Hall. The Phoenix office of Investors Properties LLC, with brokers Tom Mulhern and Brad Keirnes have represented the buyer.

When Kierland reaches build-out, lease rates for office space in the area are expected to reach $30 per sf, Wichterman says. Investors also like that north Scottsdale is more accessible than ever before now that Loop 101 has opened, he says. "It pulls the labor pool into there," he says. "With the freeways, it allows all the workers to be able to get there so the decision-makers can, in good conscience, choose to office out there."

The vacancy rate for class-A office space in north Scottsdale is about 11.3%, he says. Class-A space is mostly being built on a spec basis and has a lag time before it fill, which results in a higher vacancy. The class-B vacancy rate is down to about 7%.

Institutional investors are avoiding most office properties right now, Wichterman says, not just in Phoenix but across the country. They are a little over-balanced with office space and are worried that the slowing national economy will lower office space demand. That pessimism is reflected in the pace of deals and number of bidders, he says. In fact, Bataa Oil had planned to make additional investments in the market, but has since cooled to that idea, he says.

"There are fewer deals but they are still going at higher and higher prices," he says. "Prices are hanging tough." The number of deals closing is off by 40% from last year's figures, according to Wichterman.