Velocis announced the purchase of Camelback Square, a three-story Class-A office project in the heart of Old Town Scottsdale. The asset was previously owned by Lincoln Property Company, along with a fund managed by Oaktree Capital Management, L.P. The asset sold for $42.35 million.
The sale underscores the attractiveness of the project and Old Town Scottsdale.
“The Old Town Scottsdale office market is an extremely popular area that is experiencing steadily rising rents and values,” says Velocis principal Paul Smith. “Camelback Square is our first acquisition in the Phoenix market, and one we hope to build on as we pursue additional assets in the Southwest region.”
The project buyer, Dallas-based Velocis, has been active in real estate investment since 2011, purchasing 16 assets located in markets in Texas, Colorado, Georgia, Florida and North Carolina. Velocis is led by a team of five seasoned principals who are directly responsible for the acquisition, asset management and disposition of assets.
LPC will continue to manage the property for the new owner.
“Over the last few years, we’ve witnessed a strong tenant demand in Old Town Scottsdale due to the surrounding amenity base of high-end residential, luxury shopping, hotels and entertainment options,” said Oaktree managing director Mark Jacobs. “We believe the tenant demand will continue and are looking to make additional investments in Old Town Scottsdale along with other areas of Phoenix.”
The 174,917-square-foot Camelback Square is located at 6991 E. Camelback Rd., at the southwest corner of Camelback and Goldwater roads. It is currently 95% leased to tenants including Mastro’s City Hall Steakhouse, ZocDoc, Regus, Ashton Woods, Echo Global Logistics and Digital Airstrike.
Lincoln Property Company’s executive vice president David Krumwiede tells GlobeSt.com, “Our plan worked. We bought the asset in 2011 and took over receivership out of foreclosure—and it was still a little dark in Phoenix, but we had an A-plus location. The building needed some TLC, it needed to be revamped; we gutted the lobbies and corridors and improved the landscaping. We actually lost occupancy out of the gate; they were either tenants who were month-to-month or who shouldn’t have been there in the first place. But once we made the improvements, we got the occupancy up and everything played out how we planned it.”
LPC and Oaktree purchased Camelback Square out of special servicing in June 2011. Since that time, they have completed a major renovation including new building entrances, modern lobby and common area finishes, a courtyard water feature and patio furniture, and upgraded building signage. They also initiated an aggressive leasing plan that, in partnership with Bill Blake, Craig Coppola, Andrew Cheney, Colton Trauter and Gregg Kafka of Lee & Associates, moved the project from just 50% occupied to almost 100% occupied.
Barry Gabel, Chris Marchildon, Kevin Shannon, Ken White and Paul Jones of CBRE led the project’s investment sales listing campaign.
Camelback Square sits adjacent to the two million-square-foot Scottsdale Fashion Square regional shopping center featuring the state’s only Barney’s New York and Neiman Marcus. It is located in the heart of Old Town Scottsdale, a submarket that consistently attracts forward-thinking companies seeking the area’s contemporary mix of office, residential, dining, arts and entertainment destinations.
“Old Town Scottsdale is an example of the new creative office environment, with the amenities investors look for to deliver solid rent growth, rising values and strong tenants year after year,” says Krumwiede, who completed the deal along with vice president Amr Ceran. “We recognized this when we purchased Camelback Square almost four years ago, and that foundation is even more evident today, following the execution of a repositioning plan that re-energized this asset as a long term centerpiece project.
“Tech tenants are coming out of California and Phoenix is a beneficiary of that. We’re seeing a lot of creative and deconstructed space. Employees want that live, work, play atmosphere that Scottsdale and Tempe have to offer—Old Town is a part of that and we’re happy to see it attracting those tenants.”