Phoenix, AZ – December 9, 2011 – (RealEstateRama) — Lee & Associates Arizona is pleased to announce a pair of commercial property sales and a five-year lease in the East Valley.
In the first deal, the Freeway Executive Center II office development located at 10439 South 51st Street in Phoenix was sold for $3,750,000, or $78 per square foot. Lee & Associates Principals Chris McClurg and Adam Tolson represented the buyer, Child & Family Support Services. Bryan Taute, Senior Vice President at CBRE, and Eric Wichterman, Executive Vice President at Cassidy Turley BRE, represented the seller, FEC 2, LLC.
Child & Family Support Services (CFSS) was previously considering space for lease along the East Valley stretch of Interstate 10; however, a price reduction at the 47,836-square foot Freeway Executive Center II caused the buyer to consider for-sale office product. Freeway frontage and visibility also played a significant role in the social services firm’s decision to purchase the building.
CFSS currently leases 13,000 square feet at McClintock Office Plaza at 4700 South McClintock Drive in Tempe, though the term is set to expire in 2012. CFSS expects to move into their new space by April of 2012 and plans to occupy the ground floor and part of the second story. The remainder of the space will most likely be placed on the market for lease.
The Freeway Executive Center II was originally constructed by LGE Design Build in 2009 as a build-to-suit for Executive Suite and Med Spa. The seller had previously purchased the bank-owned property in June of 2010 as an investment. Weak leasing activity, however, caused the operator to consider both lease and sale offers, despite the relatively healthier office space demand in the Tempe/I-10 submarket. Office owners in the Tempe/I-10 submarket record the second-lowest vacancy rate in the Valley. The third quarter area vacancy of 23.8% is down 60 basis points in the past three months. Asking rents fell 1.7% to $19.99 per square foot during the same stretch. Metrowide office vacancy fell 40 basis points in the third quarter to 27.2%, while asking rents declined 1.3% to $21.26 per square foot.
In separate transactions, Lee & Associates Principals Chris McClurg and Ken McQueen arranged both a sale and a lease at 475 West Vaughn Drive in Tempe and represented all involved parties. The bank-owned warehouse asset was sold to by the lender, California Bank & Trust to Cabot Industrial Value Fund III. The 67,452-square foot building sold for $3,025,000, or $45 per square foot.
At the beginning of the sale, the Vaughn property was 50% occupied by VWR International, but the remaining space was leased by Tech Group North America at the close of escrow. Full details of the lease are not disclosed though Lee & Associates’ Principal Ken McQueen noted that, “the tenant will receive reduced rental rates for the first two years in lieu of space improvements from the landlord.”
The five-year lease will bring the first-year initial yield on the investment property to approximately 9.5%.
The new lease will mark Tech Group North America’s third industrial property lease in Tempe. The company will take occupancy before year end and anticipates eventually constructing clean rooms at the property.
The warehouse property came online in 1987 and features both dock- and grade-level loading and a large fenced yard for the users.
Industrial vacancy in the Southeast submarket fell 10 basis points over the past three months to 13.8% in the third quarter, and monthly asking rents held steady at $0.61 per square foot. Industrial vacancy rates in the Phoenix MSA improved 40 basis points to 14.4% in the most recent quarter, while face rents were unchanged at $0.51 per square feet.
About Child & Family Support Services
Child & Family Support Services was established in 2003 to provide individuals and families with flexible, individually-tailored support services. CFSS specializes in helping provide the support needed for individuals with special needs to continue living in their homes or community placements. Their services also focus on the support needed to return individuals from formal settings such as hospitals, residential treatment centers, or detention settings back into their local communities. (Source: www.cfssinc.com)
About Cabot Properties
Cabot Properties is a private equity real estate investment firm. The firm is a leading investor, developer and operator of industrial properties throughout North America and the United Kingdom. Formed in 1986, Cabot has invested $5.2 billion in industrial real estate, managing and operating approximately 1,800 tenants in more than 125 million square feet. Cabot is the sponsor of Cabot Industrial Value Fund III, which is currently seeking to invest up to $1.5 billion in the industrial property sector, focusing on major metropolitan areas. (Source: www.cabotprop.com)
About Tech Group North America
The Tech Group is a global leader in injection molding offering contract manufacturing solutions for the medical and consumer industries. Since May 2005, The Tech Group has been a part of West Pharmaceutical Services, Inc. West, based in Lionville, Pa., is a global leader in the design and manufacture of elastomeric components and systems used for injectable drug delivery and in the design and manufacture of pharmaceutical seals. (Source: www.techgroup.com)
About Lee & Associates Arizona
In addition to celebrating 20 years of leadership excellence in commercial real estate in the Phoenix market, Lee & Associates is one of the largest national commercial real estate providers with regional expertise. Lee & Associates currently has 44 offices located throughout the nation. Clients of Lee & Associates Arizona enjoy a comprehensive range of specialized commercial real estate services including: industrial, multi-family, office and retail property sales and leasing; real estate investment consulting, property acquisition and disposition; tenant representation and relocation, land assemblage. The Phoenix office of Lee & Associates was established in 1991 as the first office to open outside of California. The Lee & Associates model – empowering agents as owners of the company – attracts industry-best real estate agents and has fueled the Phoenix office’s growth from 12 brokers in 1991 to almost 40 brokers today.
The Lee & Associates Arizona Research & Communications Divisions provides all facets of support to the Lee brokerage team. Lee & Associates Arizona also regularly publishes quarterly research reports regarding national and local real estate and economic trends. For questions about publications, press releases or commercial real estate and economic data and trends, please contact David Delich at (602) 474-9512 or ddelich (at) leearizona (dot) com