ESI Ventures, doing business as Black Canyon Place LLC, acquired Mercado del Rancho in an all-cash transaction from 10301 North 92nd Street Holdings LLC of Washington DC, a corporation controlled by CWCapital Asset Management. CWCapital took back the property in late 2009. It was previously owned by Phoenix-based Orsett Properties Ltd.

CWCapital hired Barry Gabel and Mindy Korth of CB Richard Ellis' Phoenix office to sell the property, which was developed in the mid-1980s. "We didn't have a list price, because the seller wanted to make sure the market established the value," Korth tells GlobeSt.com.

Similar properties in the Phoenix metro area have sold for $40 per square foot to $60 per square foot. "It's my perception that buyers determined value based on discount from replacement value and quality of location," Korth says, adding that the property was on the market for three weeks.

Located at 10301 N. 92nd St. at the corner of 92nd Street and Shea Boulevard, Mercado del Rancho is directly across from the Scottsdale Healthcare Shea campus. It is adjacent to a Sprouts grocery-anchored shopping center.

"Mercado Del Rancho drew a lot of interest from investors," Korth says. "Its North Scottsdale location and proximity to Scottsdale Healthcare Shea Hospital and Medical Center, combined with the lack of additional developable land in the area, offer the potential for significant upside."

Nathan Thinnes, vice president of acquisitions for ESI Ventures, says Mercado Del Rancho offers a unique investment opportunity. He points to the property's panoramic views, walk-to amenities, proximity to the hospital, ability to accommodate large users and "above all its Scottsdale address."

Mercado del Rancho had previously been occupied by CVS/Caremark. The firm relocated to another facility in 2009, leaving the building only 7% occupied at the time of sale, Korth says.

"One of the options is to re-lease the building to medical office users or companies that support the medical industry," Korth says.

But before ESI Ventures can begin leasing efforts, Mercado del Rancho will require some improvements. Korth estimates the upgrades will cost less than $1 million.

"The buyer is patient and sees the long-range value of the asset," Korth says. "As the economy recovers and rental rates recover, the owner anticipates that Mercado del Rancho will achieve better rates."

Mercado Del Rancho marks ESI Ventures' first office acquisition since 2003. The investor purchased a distressed apartment complex in Phoenix last year and is actively on the hunt for other value-added investment opportunities.