"They bought it as a user, signed a lease and sold it with their lease in place," Steve Kohls, an associate in the office properties division of Phoenix-based Lee & Associates Arizona, tells GlobeSt.com. "It's a creative deal."
Lutz and Kron initially purchased the building from North Scottsdale Gateway LLC and Byxbee Development Partners for about $13.3 million. They signed a seven-year lease on behalf of Phoenix-based Great Southwest Mortgage, of which they are principals, for the third floor of the 80,468-sf building. They then sold the building with their lease intact to United Insurance, Kohls says.
The three-story, class A building was constructed in 2001 and sits at 17015 N. Scottsdale Road, an area that Kohls regards as the hottest office submarket in the entire Phoenix region. Great Southwest Mortgage will occupy 28,000 sf on the entire third floor, leaving 7,000 sf available on the second floor.
Lutz and Kron acquired the building at 50% occupancy, but have since brought it up to 91% with Great Southwest's inclusion. The principals intend to consolidate five Valley offices in the new headquarters. Byxbee will continue to manage the property. Kohls says Lutz had initiated a similar double escrow with United Insurance on a smaller property before this deal.
The stone-and-glass building is considered prime office space in one of Phoenix's hottest submarkets, where vacancies sit comfortably at 11%. Kohls and Craig Coppola of Lee & Associates represented WKL LLC while Mike Garlick and Mike McQuaid, also with Lee & Associates negotiated for Byxbee. United Insurance used in-house brokers for its end of the transaction.
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