PHOENIX—The purchase of the historic Luhrs City Center for $44 million is the latest example of the upswing taking place in downtown Phoenix commercial space and a sign of the investor confidence that is anticipated to continue. The acquisition by Lincoln Property Company and Invesco Ltd. is the second largest building sale in downtown Phoenix this year.
The buyers are focused on improving the street-level experience, with streetscapes and restaurant tenants that will add to downtown's now booming bar/restaurant market. The joint venture will next initiate a multi-million-dollar renovation that will evolve the landmark into a mixed-use blend of creative office space, ground floor restaurants and retail. The effort will be part of a downtown resurgence that includes an active office market, thriving restaurants, sports venues and the early-2017 delivery of a directly adjacent, 19-story 320-room, dual branded Marriott Residence Inn and Courtyard hotel tower.
Lincoln Property Company's executive vice president, David Krumwiede, tells GlobeSt.com: "The success of eateries and bars in the downtown Phoenix market has gone from struggling to thriving, so much so that, in some cases, are even driving demand for office—and particularly creative office space in the Central Business District. That is a tremendous and welcome shift."
The historic yet modern creative office space has had strong leasing success and the Marriott under construction will drive traffic and demand to Luhrs. Located at 11-45 W. Jefferson St. between Madison, Jefferson, First Street and First Avenue, Luhrs City Center includes two towers with 140,500 square feet of creative office space and a promenade with approximately 18,500 square feet of ground-floor retail space.
Office space at Luhrs City Center is currently 85% leased, with approximately 10,000 square feet of available space remaining and approximately 15,000 square feet of available ground-floor retail space. In recent years, the center has enjoyed approximately $10 million in capital improvements, which has modernized the development into a creative office environment with red brick interiors, exposed beams and similar features that have helped to attract a mix of office, tech and law tenants.
"When you think of iconic downtown Phoenix buildings, you think of Luhrs," said Krumwiede. "They call the project 'historically modern' because it has a combination of deep roots and modern staying power. This makes it very relevant in today's creative office market and a great site to enhance with dining and shopping–amenities that will raise Luhrs to its highest and best use in the downtown market."
The property was built by the Luhrs family between 1924 and 1929, just before the Great Depression. When it opened on April 1, 1924, the Luhrs Building was Phoenix's first 10-story high rise. For more than 40 years, the top four floors of the building were home to the Arizona Club. The 14-story Luhrs Tower was delivered five years later, in 1929, and for decades remained the tallest building in the Southwest. The towers and retail space at Luhrs City Center are served by an adjacent six-story parking structure with 434 spaces. All of the buildings are listed on the Phoenix Historic Property Register.
The property seller, Hansji Corporation, was represented by Newmark Grubb Knight Frank's executive managing director, Jerry Jacobs, and managing director, Erik Marsh. Jacobs and Steve Callahan have been retained by Lincoln to handle the office leasing.
Luhrs City Center offers direct access to Phoenix Light Rail, CityScape, the Phoenix Convention Center, Arizona State University Downtown Campus, Chase Ballpark, the Maricopa County court complex and approximately 30 restaurants within a two-block radius.
The purchase of Luhrs City Center caps off a record-breaking year for the Phoenix office of Lincoln Property Company, which since January, has generated more than $233 million in metro Phoenix investment and development activity. This includes the $58 million LPC-Oaktree Capital Management purchase of Biltmore Commerce Center in Phoenix, the $42.3 million disposition of Camelback Square in Scottsdale, AZ and the $65 million LPC-Goldman Sachs purchase of Promenade Corporate Center in Scottsdale. It also includes the development and delivery of the $24 million Waypoint Building One office property in Mesa, AZ.
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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.
