LID Investments LLC purchased the two-story building, positioned on roughly one acre, from locally based Mighton-Talamantes Land Trust for $53 per sf. Located at 6516 N. 7th St., Arcos de Oeste was built in 1971.
"This is a price per sf play, no question," says Chris Keenan, an investment broker in Phoenix for Marcus & Millichap.
Keenan, who teamed with Steve Gonzalez to represent the seller, tells GlobeSt.com that most office properties along 7th Street trade in the $90 per sf to $100 per sf range. "It was an opportunity buy in an infill location," he says. "There was a fair amount of interest, but it took the right buyer to see the opportunity." He says the acquisition was losing about $4,000 per year, closing at a negative cap rate. The buyer was represented Marcus & Millichap's Sanford Burstyn.
According to Keenan, Arcos de Oeste needs $200,000 to $300,000 invested into upgrades. "With the renovation, there's good upside in rents--as high as $2 per sf," he says. The average rental rate currently is $10.32 per sf.
"They're going to be hands-on owners," Keenan says, referring to LID Investments. "I really think they're going to make something happen there."
Mighton-Talamantes Land Trust bought the property in 1998. "The property had been going downhill and they decided to cash out while the market is good," Keenan says. "They sold it for close to what they paid for it even though it was just 38% leased." Cuellar Realty of Phoenix handled leasing and management.
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