PHOENIX-Arizona Center, a landmark mixed-use project in downtown Phoenix, has a new owner. Newton, MA-based CommonWealth REIT acquired the 1-million-square-foot complex for $136.5 million from Chicago-based General Growth Properties Inc.
The deal represents the largest office sale in the Phoenix metro area by dollar amount in the past three years, according to Bob Young, senior vice president with CBRE’s local office. He represented the seller in the transaction, along with Steve Brabant, Glenn Smigiel and Rick Abraham in the same office. George Good in CHRE’s Chicago office and Tom Bohlinger in CBRE’s LA office also represented the seller.
Situated on 16 acres on the northeast corner of Van Buren and Third Streets, Arizona Center consists of two class A high-rise office towers, garden office suites, open air retail and a 24-screen AMC movie theater. The complex also includes three parking structures and a mix of pedestrian and open space highlighted by fountains, gardens, waterfalls and palm tree-lined walkways.
One Arizona Center, one of the complex’s two office towers, is 88% occupied. The lead tenants are Snell & Wilmer, Arizona’s largest law firm, and Pinnacle West Capital. The second tower, Two Arizona Center, is 100% leased to Arizona Public Service, the state’s largest electric utility provider.
Young tells GlobeSt.com that General Growth considered selling Arizona Center’s two office towers in separate transactions, but decided against doing so when it became obvious that the property would generate a higher sale price if sold as a whole. The property garnered 16 offers, he says.
“This was a complicated deal, and after the seller interviewed the top buyers, CommonWealth REIT emerged as the winner,” Young says, adding that the REIT paid cash for the deal.
Young explains that Arizona Center was built on land owned by the city of Phoenix and ground-leased to the developer in a GPLET – government property lease excise tax – structure. “The buyer had the opportunity to unwind the GPLET and buy the asset as a fee simple transaction,” he says, noting that the deal also included three development parcels of one acre each.
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