(Read more on the industrial market.)
TEMPE, AZ-Phoenix-based Magneto Investments LLC has sold the 99,148-sf Clopay Building Products building for $8.3 million. The 15-year-old industrial structure on 6.25 acres in the West Chandler-Tempe submarket was purchased by LBA Realty of Irvine, CA.
According to Bruce Calfee, a senior vice president in the Phoenix office of Grubb & Ellis/BRE Commercial LLC who represented the seller of the 685 W. La Vieve Lane property, the $83 per sf price was 10% to 20% under market for similar industrial properties. "Some deals within a couple miles are going for $100 a sf," he reports. "I'm representing a 68,000-sf building of about the same age being offered at $100 a sf. We have one offer in and other people are circling. I'm sure it will go north of $90 a sf."
Calfee says the selling price was held down by a below-market five-year lease signed July 1 by Clopay. The building products company, which has occupied the building 10 years, exercised a renewal option based on the consumer price index. Although Calfee would not reveal the exact rent, the property's marketing brochure gives projected annual income as $487,200, which works out to about 41 cents per sf. Grubb & Ellis' second-quarter report for the Chandler market calculates the average asking rent for warehouse space at 55 cents per sf.
"The replacement value is well above sales price, just because of the land cost," the broker adds. "Land alone in the Tempe-West Chandler area is probably $10 a sf. That is, if you can find any to buy." He says the seller had owned the site 10 years. "He thought it was a good time to sell based upon the climate," Calfee adds. "He's looking to take the proceeds and invest them in some land in a growing part of the market."
In Calfee's estimation, the next wave of development in the market will happen in the Chandler Airpark area near Chandler Municipal Airport. "It's less expensive than Tempe, but even there it's hard to find anything for less than $6 a sf for parcels under 40 acres," he says.
Calfee pegs the cap rate for the Clopay deal at 6%, but says he expects cap rates to start rising soon. But with or without such a rise, he points out that the market is continuing to draw investors. "The market is still very active," he says. "Lots of people are looking to place their money in Phoenix and I think sales will continue strong."
Josh Wyss, a senior associate in the Grubb/BRE Phoenix office assisted Calfee on the seller's side of the transaction. Two other senior vice presidents from the same office, Paul Boyle and Rick Danis, represented LBA.
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