TerraCap Sells Phoenix Flex Campus for $38M

TerraCap Management has sold Koll Cotton Center, a seven-building, 228,605-square-foot flex industrial campus in Phoenix. G.W. Williams Co. paid $38 million for the asset, financing the purchase with a 5-year, $17.5 million loan from United of Omaha Life Insurance Co., public records show. Cushman & Wakefield brokered the deal.

The seller had acquired the asset in 2021 from BKM Capital Partners for $30.9 million. A $23.2 million loan originated by Voya Investment Management funded the transaction.

The almost 18-acre park came online in 2000 and was renovated between 2016 and 2018, according to CommercialEdge data. TerraCap implemented further improvements—such as new roofs and exterior upgrades—and repositioned the vacant suites, enabling the firm to complete some 160,000 square feet in leases. The property was 98 percent occupied at the time of sale.

A Phoenix flex campus

Koll Cotton Center comprises both office and industrial spaces. Buildings 1, 2 and 3 feature 78,400 square feet of office space with floorplates ranging from 21,987 to 28,752 square feet, as well as more than 385 parking spaces. Tenants include Ewing & Ewing Attorneys, AXIS Appraisal Management and MSI Tec, according to CommercialEdge data.

The other four buildings are industrial facilities with 20-foot maximum clear heights, 28 drive-in doors and a total of 548 parking spaces. Arcadia Solar, Atlas Copco and Acosta are some of the industrial tenants at the property, the same source shows.

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The campus is at 4050 E. Cotton Center in the Airport Industrial submarket, providing easy access to interstates 10 and 17. Downtown Phoenix is some 7 miles away, while Sky Harbor International Airport is within 4 miles.

Koll Cotton Center is part of Cotton Center Business Park, a 286-acre development encompassing more than 3 million square feet of real estate. Last year, Loloft signed a 51,902-square foot lease within the master plan, the location including shared warehousing and coworking spaces.

Cushman & Wakefield Senior Director Kirk Kuller, Executive Vice Chair Will Strong and Director Michael Matchett, together with Senior Associates Molly Hunt and Dean Wiley, arranged the deal. Executive Directors Tracy Cartledge and Robert Buckley secured the financing for the buyer.

Phoenix’s thriving industrial sector

According to a recent CommercialEdge industrial report, the Phoenix market saw some $2 billion in assets changing hands last year for an average of $159 per square foot, considerably higher than the $129 national figure. The metro’s vacancy rate clocked in at 3.2 percent as of December, 140 basis points lower than the country’s average.

In one of 2023’s most significant transactions, Prologis acquired a 2.7 million-square-foot industrial park in Goodyear, Ariz., setting the record for the largest multi-building industrial park sale in the state. The asset changed hands for $184 million.

A few months earlier, ViaWest Group and Walton Street Capital purchased a 586,915-square-foot industrial portfolio from TA Realty. Those facilities traded for $97.8 million.