PHOENIX—Construction is under way on Hayden Ferry III, a 261,000 square foot, Class A development in the Tempe submarket of Phoenix.
Hayden Ferry III will be the final phase in Parkway Property's 780,000 square foot master planned office community. The 10-story property will be located along the south shore of Tempe Town Lake, offering waterfront views and accessibility to the Mill Avenue entertainment district and light rail system.
James R. Heistand, Parkway's president and CEO, says, "We believe that current office market conditions in the Tempe submarket validate our conviction to commence construction on Hayden Ferry III. Market rental rates for our properties in Tempe have continued to increase, including a 24% increase in rental rates at Hayden Ferry I since our initial investment in June 2011. Additionally, Parkway's current Tempe portfolio is 97% leased as of January 1, 2014. We have achieved our pre-leasing target on Hayden Ferry III, begun construction and we look forward to creating long-term value at the asset."
Parkway Properties Office Fund II L.P. signed an amendment to its partnership agreement authorizing the Hayden Ferry III development and providing for a transfer of an interest in the Hayden Ferry III development that will give Parkway a 70% interest, with its partner maintaining the remaining 30% interest.
Parkway expects total projects costs of approximately $68.8 million, including tenant improvements and leasing costs, and intends to finance the project with a construction loan of approximately 65% of the total cost.
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