Commercial Executive Magazine hears from Barry Gabel, Executive Vice President, CBRE, on the recent Phoenix office portfolio deal worth $255 million.
Gabel, along with Chris Marchildon and Will Mast with CBRE’s Phoenix office arranged the sale of a five-building portfolio in Metro Phoenix totaling nearly 806,000 SF for $255 million.
Liberty Property Trust, a Pennsylvania-based real estate investment trust, sold the four-building Liberty Center at Rio Salado in Tempe and a single-tenant office building located at 8501 East Raintree Drive in Scottsdale to an undisclosed buyer.
Q: Who brought you this deal and why is this a good investment? Can you tell us about your partnership with Liberty Property Trust on this deal?
A: We were asked by Liberty Property Trust to present a proposal for Investment Advisory Services. It was a competitive proposal environment pitted against the top competition on the West Coast. We have had longstanding relationships with the local Liberty Property Trust key employees which has since parlayed itself into a fantastic relationship with several others across the country with Liberty Property Trust. As part of the proposal, we focused on the key components that were paramount in the sales process:
• The offering consisted of newly constructed, “Best-In-Class” buildings
• An institutional quality tenant roster leased to Centene Corporation, Vanguard, DHL, WageWorks, Carvana and DriveTime
• Stable cash yields with future upside for value creation in the future
• Tempe and Scottsdale Airpark submarket prestige (i.e. Adjacency to Arizona State University, proximity to surrounding residential, freeways and amenities)
Ancillary reasons as to why it was a good investment:
• Abundant garage parking (nearly all of which is structured)
• Demonstrable leasing momentum – the Liberty Center at Rio Salado Properties leased within the first 3-years of the development pro-forma (originally scheduled to be 10 years)
• Redundant power from three separate substations
• Convenient Building Access with four points of driving access at Liberty Center at two points a Vanguard
Q: As one of the largest multi-tenant office transactions on record for Metro Phoenix, what does a transaction of this stature mean for the future of Phoenix?
A: The diverse investor pool and ultimate pricing is a testament to metro Phoenix’s increasing appeal to investors of all types, from all over the globe. This transaction is a game-changer for Phoenix, confirming the strength of the Phoenix economy and that there is a long runway for continued economic growth and sustainability.
High prices in larger coastal markets are attracting investors to Phoenix where they can get a higher return on investment without spending as much to buy the building.
A diversifying economy, strong workforce and attractive business climate as factors that make Phoenix a stable real estate investment market now, and in the years ahead.
Q: This is an exciting deal not only for Phoenix, but also for your team. How is your team celebrating and what’s next?
A: Our team has been incredibly blessed to have represented our clients in some of the most high-profile office sales over the past few years. Most recently, our team has transacted on $705 million of office sales through the first three quarters of 2018 (57% of all sales over $25 million and 38% of all transactions overall). Having said that, there are still many office investment sales opportunities on the horizon with nearly $1.7 billion of office property either with a buyer selected, actively being marketed or slated to hit the market soon. We are extremely fortunate to have a large hand in what is in the market and coming available in the months ahead.
Q: Anything else you’d like to add?
A: We would like to thank our clients and business partners for their continued loyalty and confidence in our team. We couldn’t do it without them!
About Liberty Center
Developed from 2014-2018, Liberty Center at Rio Salado is a 682,406-SF office campus located in the highly desirable Tempe submarket at Priest Drive and Rio Salado Parkway, with visibility from the Loop 202 freeway. The property features four Class A, two- and three-story, triple-net leased office buildings positioned on nearly 41 acres. Each building features a dedicated parking structure with a parking ratio of six spaces per every 1,000 square feet.
The campus is 100 percent leased to a mix of nationally and globally recognized tenants including Centene, DHL, Carvana, WageWorks and DriveTime. Brad Anderson with CBRE’s Phoenix office successfully leased the LEED Gold certified campus which is close to downtown Tempe’s numerous retail and dining options, Arizona State University’s Tempe campus and Phoenix Sky Harbor International Airport, one of the business airports in the country.
About Raintree Office Building
Developed in 2006, the three-story asset at 8501 East Raintree Drive features 123,340 square feet of Class A office space. Institutionally maintained, the property features large functional floorplates, unhindered views of nearby mountains and abundant structured employee parking. The building is also surrounded by world-class amenities and upscale retail destinations, offering easy access to Kierland Commons, Scottsdale Quarter and Scottsdale Airport.