Phoenix-based Alliance Residential Co. previously had the property under contract with seller Phoenix-based San Juan Sun Valley Inc. for more than $11 million. It intended to demolish the existing structures and replace them with a 290-unit apartment project. Though it succeeded in getting the property rezoned, the company withdrew from the project before beginning work. Lieb, president of Michael A. Lieb Ltd., acquired the property after Alliance pulled out due to inability to get financing for the proposed project.

The property is located within an official redevelopment zone, making any project developed on the site potentially eligible for tax abatements. But rather than trying to push a new project through during a period of economic retrenchment, Lieb plans to hold the property till the economy settles and the area's real estate market rebounds. He says the deal's approximately 8% cap rate allows him to make money on the current uses. The previous price, he adds, reflected the site's development potential rather than existing use. With redevelopment off the plate due to the credit crisis, the seller had little choice but to reduce the price.

Choice Hotels International, the franchise holder of the Quality Inn & Suites, has a five-year contract to operate the hotel, and the office building, known as Los Olivos Plaza, is about 70% occupied. While the Phoenix office market has been suffering a severe downturn, Lieb maintains the building's garden-style design and location adjacent to the museum and a block from the city's newly inaugurated light-rail system make it more attractive than many of its competitors.