"We feel the CBD has the highest potential of all the submarkets," says Zaya S. Younan, chairman and CEO of Younan Properties. "Phoenix is experiencing tremendous population growth of 2% a year and this has a direct impact on demand for office space and expansion of current workforce."
Younan tells GlobeSt.com that CSFB was in a hurry to dispose of Meridian Bank Tower and contacted him. "They had a humongous fund open just because of one asset--Meridian Bank Tower--and they needed to close fast," he says. "We looked at the asset and liked what we saw and closed in less than 60 days."
The 20-story building is located at 3550 N. Central Ave. "The building is strategically located in the north central part of the CBD," Younan says, "and demand always starts there. The new light rail will increase demand." The building is 55% leased to tenants like Make a Wish Foundation of America, Meridian Bank, Darcomm Supply Inc., Warner, Angle, Roper & Hallam PC and CorVel.
Younan Properties' goal for Meridian Bank Tower is to renovate and stabilize the asset as well as implement an aggressive leasing program in order to reach 90% occupancy by mid-2006. "It is truly a class A building, but it's a little tired," he says. Although the building was significantly renovated in early 2001, Younan Properties will spend about $1 million refurbishing the tower.
"Our niche business model is to reposition the property and upgrade it and give it a positive image so people will want to lease space in it," Younan says. He points out there is about 675,000 sf rolling in CBD leases in the near future. "We can position the asset to get a piece of that. …We have the advantage to offer a better rate and better terms," he says.
Rates will range from $13.50 per sf to $14.50 per sf full service. "We feel we can afford to offer these rates and still make a significant profit," Younan says. "We feel our competitors won't be able to be as aggressive."
Younan Properties' Phoenix assets have seen their occupancies increase by 12% and operating expenses reduced by 31%, according to Younan. The firm intends to increase its portfolio in the local market from 675,000 sf to one million sf with the acquisition of an asset, now about to go under contract, in the 44th Street Corridor, he says. In the Meridian Bank Tower transaction, Younan Properties represented itself while CSFB was represented by Barry Gabel of Trammell Crow Co.'s local office.
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