ViaWest bought the 35,020-square-foot building at 6930 E. Chauncey Ln. in shell condition for $7.3 million shortly after its completion in 2007. But a marketing program that focused on large users failed to produce results. A recent change to target smaller users and offer both lease and condominium purchase options combined with more favorable rates appears to have turned the trick. Bret Isbell, who represented the landlord in the transaction, says he has a second lease/purchase deal with a dentist for 2,200 square feet close to completion and a lease for 10,000 square feet with a medical provider in the works. The deals were initiated when Isbell worked for Scottsdale-based Logan Commercial Advisors, which has the brokerage assignment. He is now a senior vice president at GPE Properties in Scottsdale.
The company acquired the building when a previous buyer, which had already bought a twin structure built by the same developer, dropped out of escrow. ViaWest partner Scott Schwarz tells GlobeSt.com the initial strategy was to lease or resell to a single-user, but he says two different sales deals fell out of escrow. A subsequent attempt to lease about half the space to a single tenant also came up short.
But since shifting the brokerage assignment to Logan late last year and revising the marketing strategy, he reports activity has picked up dramatically. "Once word got out, we've been doing a number of tours every week," says Schwarz. "It's an incredible location with great nearby amenities. Finally people are getting it."
The ViaWest exec acknowledges that "aggressive deal terms" are a key component of the resurgence of interest. Isbell says units are selling for $180 a square foot and renting for a $23 a square foot annually. "For a new shell, that's definitely on the lower end in a Class A building in this area," he states. "Since we got aggressive with the pricing, people have gone from kicking the tires to actually doing deals."
According to Isbell, getting a new deal closed in the current market is a major accomplishment. "There's a lot of looking but not much doing," he says. "As much as many tenants would like to move, most of them make the safe decision and renew for a year or two after negotiating hard with their current landlord. It's a real challenge to get them to commit to a new space."
Nicholas L. Miner, an associate broker with Eagle Commercial Realty Services who represented Landmark in the transaction, agrees the rates were a major factor in the transaction. "We looked at several properties," he says. "It's quite the market for tenant/buyers right now. But at this price and this location, my client was extremely pleased."
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