The seller, San Diego, Calif.-based Fiesta Ranch LLC, negotiated the short sale with the construction lender, Wells Fargo. The buyer, Phoenix-based Guadalupe Retail LLC, paid cash for the property, which is located at the Northeast corner of Guadalupe and McQueen Roads.
Built in 2007, The Shops at Fiesta Ranch is currently in grey-shell condition, and the new owner will complete the build out of individual tenant suites including the addition of HVAC units and electrical panels, according to Greg Abbott with De Rito Partners Inc.
Abbott, who brokered the transaction, tells GlobeSt. that the seller started construction on the center when "Phoenix was rocking". By the time the center was ready for delivery and lease up, the economy had tanked. The center has sat vacant for more than two years.
"If this center had leased up, and we had sold it two years ago, it would have sold for triple the amount," Abbott says.
Abbott says the center was on the market for more than 18 months and was originally listed at $3.5 million. Once the list price dropped to $1.5 million, the property received eight offers.
"The buyer felt comfortable with the deal because of the low price and the fact that the market is improving," Abbott says. "He felt like now was a good time to strike. He will be able to offer very attractive rental rates, which will be very attractive to area tenants looking to add a location or relocate."
Abbott predicts that the Phoenix market will see an increasing number of distressed, pre-foreclosure and foreclosure properties brought to market. The sale of The Shops at Fiesta Ranch will serve as a guideline for other buyers and sellers.
"A lot of us in the market are trying to figure out what distressed properties are worth, and now here's a comp that we can point to and reference," Abbott explains. "This sale will help the market establish a new pricing basis for distressed property values and will help with the 'price realization' process that we are going through right now."
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