"It was very competitive situation," Brian Ackerman, an associate with Cushman & Wakefield of Arizona Inc., "and the buying pool ran the gamut." The class A Scottsdale Financial Center III is situated on about two acres at 7272 E. Indian School Rd., a sister to KBS' 105,457-sf Scottsdale Financial Center I at 4110 N. Scottsdale Rd. and the 166,231-sf Scottsdale Financial Center II at 4141 N. Scottsdale Rd.
Ackerman tells GlobeSt.com that it wasn't surprising that Newport Beach, CA-based KBS Realty Advisors emerged as the winner for Scottsdale Financial Center III. "KBS already owns Scottsdale Financial Center I and they're very familiar with the submarket," he says. "KBS thought they were getting a good value for the building." Ackerman partnered with Chris Toci in C&W's Phoenix office and J. Russell Sherman and Christopher Aust in C&W's San Francisco office to broker the acquisition.
Scottsdale Financial Center III's location in the Scottsdale CBD is particularly attractive to investors, Ackerman says. "There's about $1.4 billion of investment in the redevelopment of downtown Scottsdale with a lot of new retail and residential development," he adds. "This definitely benefits the office market and shows that downtown Scottsdale is a place where people want to be."
The five-story Scottsdale Financial Center III, built in 1985, was 94% leased at closing. The tenant roster includes a mix of small and large tenants ranging from 1,000 sf to 30,000 sf. The lead tenants are Colony Group and Tri-Core Engineering LLC. The quoted rent is $23.50 per sf.
Ackerman says Scottsdale Financial Center III is vulnerable to a bit of rollover for a couple years. However, he contends it's nothing to worry about. "The occupancy levels for office buildings in downtown Scottsdale are pretty high--there's pretty good demand," he says. "We think that the location and the demographics are so great that KBS could backfill the space if tenants left Scottsdale Financial Center III."
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