Office investment and management expert Lincoln Property Company (LPC) and partner Goldman Sachs have purchased Promenade Corporate Center in Scottsdale, Arizona, with plans to re-establish the property through a strategic renovation plan with up to $1 million in improvements.
The 256,175-square-foot Promenade Corporate Center totals two, four-story buildings at 16427 and 16435 N. Scottsdale Rd. It sits within the prestigious North Scottsdale/Kierland submarket and at the center of the Scottsdale Promenade, a 730,000-square-foot, mixed-use retail project. In all, the office and retail portions of the project total approximately 1 million square feet on 84 acres.
DTZ’s Rick Reeder and Brad Tecca, from the San Diego office, and Jeff Wentworth and Sean Spellman, from the Phoenix office, represented the Promenade Corporate Center seller, Excel Trust Inc. (NYSE:EXL), a retail-focused real estate investment trust. Excel remains the owner of the surrounding Scottsdale Promenade retail project.
Promenade Corporate Center is currently 80 percent occupied by tenants ranging from Fitch, Inc. and Healthcare Trust of America to Meridian Bank and Regus Corporation. They enjoy surrounding Scottsdale Promenade retail and restaurant tenants including Nordstrom Rack, Lowe’s, Trader Joe’s, PetSmart, Jos A. Bank, Pier 1 Imports and Ulta, as well as Capital Grille, Benihana, Cantina Laredo, Habit Burger Grill and In-N-Out.
“This is a fantastic addition for our team, with room to fill out the project’s vacant office space and maximize its potential as the area’s largest and best office option,” said Lincoln Property Company’s Executive Vice President David Krumwiede, who completed the investment purchase along with Vice President Amr Ceran. “We are in an upswing office market, with new, cutting-edge tenants committing to the Valley every day. We are more than excited to expose that interest to this project.”
“Contemporary companies want exactly what the Promenade offers – quality, quick freeway access, walkability and exceptional shopping and dining,” said Ceran. “Those amenities are all represented here, and sit just outside of the lobby doors.”
In addition to a lease-up effort, LPC and Goldman will invest up to $1 million in improvements to the 2004/2005-built Promenade Corporate Center. Some of these improvements include lobby renovations, common corridor painting and landscape work.
DTZ’s Wentworth and Spellman will retain the Promenade Corporate Center marketing and office leasing assignment. LPC Director of Management Services Alisa Timm will direct the property management strategy, adding to the more than 7 million square feet already managed by LPC across the Desert West Region.
“We’re thrilled at the opportunity to serve the Promenade’s office tenants as they map out their strategies in the new economy,” said Timm. “This is a beautiful property that will serve them well in that effort.”
“Occupancy in the North Scottsdale office submarket has increased 3.3 percent in the past year, and is expected to improve even more in the years to come,” said Wentworth. “That says great things about this area and its potential to please investors and support tenants with a vibrant amenity base.”
Promenade is the latest asset to join LPC’s track record of successful Class A office repositioning efforts.
In February, the company, along with a fund managed by Oaktree Capital Management, L.P. (Oaktree), sold Camelback Square to Dallas-based Velocis for $42.3 million.
LPC and Oaktree purchased the Class A, 174,917-square-foot Camelback Square out of special servicing in June 2011. They next initiated a major renovation and leasing plan, capitalizing on a prime location in Old Town Scottsdale to improve the building from 50 percent occupied to more than 95 percent occupied with tenants including Mastro’s City Hall Steakhouse, ZocDoc, Regus, Ashton Woods, Echo Global Logistics and Digital Airstrike.