Greater Phoenix Asset Trades for $132M

2114 S. Freedom Way. Image courtesy of CBRE

Strategic Office Partners has acquired two buildings totaling 300,000 square feet in Tempe, Ariz., in what is considered to be the region’s highest-priced office deal year-to-date.

Boyer Co. sold the Class A office assets with the assistance of CBRE, pocketing $132 million or $440 per square foot. According to a recent CommercialEdge report, office sales across Greater Phoenix averaged $197 per square foot as of the end of August.

The transaction came on the heels of Tempe’s largest office sale of the year in terms of square footage. The deal involved a two-building, 446,000-square-foot property that Shorenstein Properties purchased from KBS Realty Advisors for $117.5 million before closing credits and disposition fees, marking the firm’s first office investment in Greater Phoenix in the last two decades.

The properties, up close

Located at 2114 and 2116 S. Freedom Way, the two newly constructed buildings are within Rio 2100, Boyer’s 60-acre business park that comprises 634,000 square feet of office space, various retail amenities and two hotels, as well as a residential component.

Boyer developed the four-story office properties as build-to-suits for Freedom Financial Network, which leased the entire space in 2017. According to CommercialEdge information, the developer completed the buildings in 2018 and 2019, respectively. The properties feature 14- to 16-foot ceiling heights and abundant parking, as well as the largest office building commercial kitchen in Arizona.

The neighboring properties are some 3 miles northeast of downtown Tempe and of 100 Mill, the 287,000-square-foot office development of Cousins and Hines that ranks as one of metro Phoenix’s largest office projects currently underway. The location is near the Loop 101-Loop 202 interchange, adjacent to Tempe Marketplace.

CBRE’s Barry Gabel, Chris Marchildon and Will Mast assisted the seller in the disposition, while Bryan Taute and Charlie von Arentschildt acted as leasing agents for the property. Gabel, Marchildon and Mast were also instrumental in the April sale of a metro Phoenix office landmark.

Sales in the metro’s largest office submarket

With more than 14.8 million square feet of space in its inventory, Tempe is The Valley’s largest and also one of the better-performing office submarkets due to its newer stock and proximity to Arizona State University. Class A/A+ properties amount to nearly 4.1 million square feet.

CommercialEdge data shows more than 1.3 million square feet of office space have changed hands in Tempe since the beginning of the year. Both September sales involved Class A assets and totaled 746,000 square feet, representing 77 percent of the metro’s office sales that month.