PHOENIX—The Koll Cotton Center, a seven-building, 225,435 square-foot industrial business park, has been acquired for $26 million by bkm Capital Partners, an institutional fund manager. Brett Turner, director of acquisitions at bkm Capital Partners, was responsible for sourcing and acquiring the deal, working closely with Clarion Partners. Jones Lang LaSalle represented Clarion as the seller in the transaction.
This is the sixth asset that bkm Capital Partners has acquired to be included in its $200 million-plus commingled fund which targets final close in fourth quarter 2015. The firm intends to acquire approximately $450 million of multi-tenant industrial assets by the end of 2016.
Brian Malliet, CEO and co-founder of bkm Capital Partners, tells GlobeSt.com: “This acquisition is reflective of our overall investment strategy. As a niche investment fund manager and operator, we identify institutional-quality, multi-tenant industrial assets throughout the Western US that demonstrate significant upside potential. This potential is often left unrealized until an asset is owned and operated by a company with specialized knowledge in this attention-intensive product type. We have extensive knowledge and a proven track record in this product type – it is this expertise and niche focus that sets us apart from other funds.”
The Cotton Center was at 77% occupancy upon acquisition from real estate investment manager Clarion Partners, which owned the property on behalf of a commingled fund. The business park is leased by 26 tenants in diverse industries, including telecommunications, construction, manufacturing, food service, business services and healthcare, among others.
“Multi-tenant industrial is a unique product type that is poised for substantial investment returns in the current commercial real estate market,” Malliet explains. “By acquiring this property well below replacement cost, there is a tremendous opportunity to reposition the asset through our firm's proven capital and leasing strategy.”
Bkm plans to implement interior improvements to the property, including a spec suite program for currently vacant space that will modernize the asset and result in strong residual value, according to Malliet.
“Today's small-bay industrial users are seeking 'plug-and-play' space that is fresh, modern and ready to lease. By updating the asset, we will be able to leverage the performance potential of this project, ultimately rolling tenants to a market rate rent. This strategy will further increase NOI and result in an attractive risk-return investment profile.”
Malliet notes that the asset's location in Phoenix is another factor that boosts the investment potential of this acquisition.
“As the sixth largest metro area in the US, Phoenix boasts a real estate market that is deep and diverse, with more than 266 million square feet of industrial space that has demonstrated positive net absorption for seven consecutive quarters. Further, the state of Arizona has been recognized as first in the nation for quality and availability of workforce by CNBC. Recent job growth in Phoenix ranks eighth in the nation at 2.3%, and employment and population growth continues to outpace national averages.”
The Cotton Center is one mile south of Phoenix Sky Harbor International Airport, and is approximately 10 miles from both downtown Phoenix and Tempe. Built in 2000, the property is located in the Cotton Center Master Plan, a premier destination for tenants seeking high image and excellent access.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
