Newmark Grubb Knight Frank (NGKF) announces the sale of two office buildings in the well-known and highly visible Riverpoint Business Park. The buildings, 4150 South Riverpoint Parkway and 3125 East Wood Street, were former home to the University of Phoenix for its operations center and online division until 2104, when the higher education facility moved to the adjacent newly constructed headquarters building in the business park. Flint, Michigan’s West Second Street Associates (WSSA) purchased 4150 Riverpoint Parkway building, and Orsett Properties, Ltd. purchased 3125 E. Wood Street. NGKF’s Senior Managing Director Michael Garlick represented LNR Partners, LLC in both sale transactions, working with Sean Fulp, executive managing director of NGKF Capital Markets.
“The culmination of the sale of the former University of Phoenix office buildings is a classic example of the strength of value-add acquisitions, when timed appropriately to coincide with market fundamentals,” stated Garlick. “In 2014, the Phoenix market – and owner circumstances – did not support the renovation needed to reposition these assets. Today’s improving market fundamentals and increasing tenant demand set the stage for these opportunities.
Ideally suited as a free-standing back office building, 4150 Riverpoint Parkway is a two-story mezzanine office building with 132,880 rentable square feet situated on 7.84 acres. Highly functional and efficient, the asset offers a value alternative to competing properties in nearby submarkets, while accommodating users who are looking to establish themselves in the highly desired Airport / Tempe submarket. “West Second Street Associates is excited about entering the Phoenix office market, and more specifically the Riverpoint Business Park. “This investment adds tremendous diversity and opportunity to the WSSA real estate portfolio. We look forward to repositioning and reintroducing the property to the market for large corporate back-office users looking to take advantage of Riverpoint’s strategic central location and value in the Airport / Tempe submarket,” noted Troy Farah, founder and managing partner at West Second Street Associates.
Leading Arizona developer Orsett is revitalizing 3125 E. Wood Street to appeal to users looking for open and creative space and desiring a central location in the Phoenix market. “Orsett Riverpoint is an extremely versatile asset located in the vibrant Airport/Phoenix/Tempe commerceplex,” noted Mike Freret, chief executive officer of Orsett. “Its accessibility to a huge portion of the Valley employment base is a massive selling point and we expect corporate users will embrace its institutional-grade improvements.” Also intended for back-office uses, the single-story building located on 4.93 acres features an open floor plan with 14-foot ceilings, a former gym space with shower-equipped men’s and women’s locker rooms, and a functional layout which will appeal to corporate users. NGKF’s Mike Garlick has been retained by Orsett to handle leasing and marketing services for 3125 E. Wood Street.
Built by Kitchell Development in 2002, Riverpoint Business Park was the last available site for a master-planned business park adjacent to Sky Harbor International Airport, and offers a central location with excellent freeway access. Employers have access to all of the metro Phoenix labor markets within a 30- minute commute. Notable corporate neighbors include AVNET, DHL, American Family Insurance, CVS, Wells Fargo, United Healthcare, Mutual of Omaha, The University of Phoenix and Asurion.
NGKF Research noted improving market fundamentals in the Metro Phoenix office market, with 1.95 million square feet absorbed in 2016. As a result, the overall vacancy rate dropped 110 basis points year-over-year to 19.6%, the lowest rate since 2008. Tempe led all submarkets with 262,772 square feet of positive absorption for the quarter. The tightening market coupled with robust tenant activity led to an
uptick in rents across a majority of submarkets, most notably in Tempe, Scottsdale and the Camelback Corridor. “These conditions create opportunities for the improving central market, and highlight it as a value alternative,” added Garlick. “These factors will work in our favor for Riverpoint Business Park.”