PHOENIX—Greenlaw Partners and The Broe Group have selected the Phoenix office of JLL to market a 90,000-square-foot office project in Tempe where the demand for high density space spurred demolition of a portion of the complex in exchange for a higher parking ratio.
Tempe 10/60 Corporate Center (formerly known as Corporate Fountains) is located at 4415–4625 South Wendler Dr. in Tempe, alongside Interstate 10 and just south of the I-10/SR-60. The project originally totalled 110,000 square feet in two 45,000-square-foot, two-story buildings and one 20,000-square-foot, single-story building. Upon review of the property, Greenlaw and The Broe Group recognized the opportunity to add value to its investment through a number of key physical changes. In an effort to increase density, one of the project's buildings—located at the center of the property—was demolished to create a two-building, 90,000-square-foot campus.
The demolition upgraded the project's parking ratio from 5:1,000 to 7:1,000. The new owners plan to complete additional improvements in the coming months, including the demolition-rebuild of existing building interiors.
Dave Seeger managing director of JLL tells GlobeSt.com this deal is indicative of deals seen in the past few years with regard to higher parking ratios.
“Companies are putting more people in less square footage,” says Seeger. “Gone are the big offices with all the cubicles. What corporate America is really looking for is that more collaborative environment, that open cube space with huddle rooms to serve as smaller conference areas for private conversations. Companies are creating collision areas where employees interact. This higher employee density also calls for the older buildings to be updated, needing more restrooms, more power for more computers and higher HVAC capacity.”
Seeger also cited that in 2010, office averaged 225 square feet per worker; today, 176 per worker; and by 2017 the average is predicted to be 171 per worker.
“This creates a greater corporate advantage and improved occupancy costs for our target users,” says Scott San Filippo, partner at Greenlaw Partners. “JLL is a great choice to market this asset in that they are a strategic partner in effectively positioning creative opportunities such as Tempe 10/60 Corporate Center. Phoenix has a lot of value-add opportunity and it will be a market where we look to remain active.”
“Going to this length to create a high density environment underscores Phoenix's demand for this type of space,” says Seeger, who is marketing Tempe 10/60 Corporate Center with JLL colleague and managing director Karsten Peterson. “A parking ratio of 4:1,000 or 5:1,000 is good, and 6:1,000 is great, but a ratio of 7:1,000 is outstanding.”
According to JLL's Q1 2014 Phoenix office report, tenants across the Valley are beginning to see their already limited space options dwindle in hot submarkets like Tempe. This is driving up rental rates and creating growing upside potential for owners, including those with high-density space that is attractive to users like call centers, high tech companies and financial institutions.
“Corporate America as a whole is moving toward the open office configuration—highly efficient, very flexible, higher density footprints,” said Peterson. “Adaptive reuse plays like Tempe 10/60 Corporate Center are a prime example of how owners can repurpose inefficient, zombie space to economically reposition a project.”
Greenlaw Partners and The Broe Group purchased the project for $3.5 million.
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