Matt Root, partner in the San Diego-based Shidler Group, tells GlobeSt.com that the full financial implications of the deal represent "a commitment to the property in excess of $60 million." The acquisition marks the first time in eight years that Shidler acquired an office property in the Phoenix area. Bill Palmer of the Palmer Team in Phoenix represented the New York City-based seller, Praedium Group. Shidler use in-house representation to structure the deal.
City Square, located southwest of Indian School road and Central Avenue, is made up of three high-rise buildings as well as mixed-use amenities, including the 156-room Hilton Garden Inn and the Sports Club at City Square. Also on location are service businesses like day care, banking, dry cleaning and restaurants.
During the next two years, Root says more than $10 million will be invested into refreshing and repositioning the three high-rises at 3800 N. Central, 3838 N. Central, and 5000 N. Central. The renovation plan includes exterior portions to help increase access in and around the property and create more pedestrian-friendly areas.
Occupancy was 68.5% at sale time. "We think it will take between 12 and 18 months to reach full stabilization, which means low 90% occupancy," he says, adding Trammell Crow Co. has been retained to handle leasing and property management.
"We think Arizona is the best of the hot growth markets," Root says. "For the first time, there's been a concerted scaling back of development, with zero commercial office space under construction in both mid-town and the CBD so the timing is right." That, he continued, along with the job growth in the Central Corridor and an increase in office-to-residential conversion, is increasing demand for office space. "During escrow, in fact, we leased 60,000 sf of space," he says, adding that, as of now, Shidler and TCC are working on a deal to lease an additional 15,000 sf to the General Services Administration.
In addition to closing on City Square, Shidler is holding a letter of intent for two additional office properties in the metro.
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