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PHOENIX-A Flagstaff-based partnership, Manatee Investments II LLC and Agua Caliente Investments II, has paid $13.5 million for Paradise Square, a 97,537-sf shopping center with a dark anchor. Donahue Schriber Realty Group of Costa Mesa, CA sold the 18-year-old center.
Paradise Square at 3932 E. Thunderbird Rd. still garnered 10 offers although the 55,000-sf grocery anchor space was vacated two years ago by Chandler-based Bashas' Inc., Rick Abraham, a senior associate with CB Richard Ellis Inc.'s local office, tells GlobeSt.com. "If we had been selling this center a couple of years ago, people would have shied away from it because of the dark Bashas," he says. "Today, though, there's just too much money out there looking for deals."
Abraham, Bob Young, Glenn Smigiel, Steven Brabant, Bob Pearlstein and Rick Murphy represented Donahue Schriber in the transaction. Jim Schaller of Schaller Real Estate in nearby Tempe negotiated the deal for the 1031 exchange buyer. According to Schaller, the partnership recently sold Agua Caliente, a 48,650-sf retail property at 6900 E. Shea Blvd. in Scottsdale for $11.2 million. "Paradise Square was the replacement property," he says.
Paradise Square sits on 8.5 acres near the intersection of 40th Street and Thunderbird Road. The property includes an undeveloped pad site that can support another 6,500 sf of retail space, Abraham says. "Buyers were attracted to the center because of the potential upside from leasing the anchor space and from developing the pad site," he says.
Abraham says Bashas is paying rent on the dark store. As a result, the center is 93% economically occupied. Currently, the largest tenant is Dubliner's Irish Pub with 5,000 sf. Other tenants include Blimpie, Cost Cutters and Shasta Pools. According to Abraham, there's not a lot of lease rollover for two years. Small shop space in the center leases for $19 per sf to $21 per sf, triple net.
Schaller says the new owners are "weighing all their options" while searching for a retailer to fill the anchor space. The JV is not in active negotiations with any anchor tenants. The partnership has yet to decide who will lease and manage Paradise Square. It has, in the past, hired Case Huff & Associates of Phoenix to oversee its holdings. According to Schaller, the deal closed with financing from MidFirst Bank, which was arranged by the locally based Capital Advisory Group.
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