TEMPE, AZ-Increasing its presence in this Phoenix suburb, Parkway Properties Inc. dropped $66 million to acquire the eight-story Tempe Gateway office building in an off-market transaction from Vulcan Inc. The buyer adds the 263,936-square-foot, class A office building to its growing local collection, which includes the 503,000-square-foot Hayden Ferry Lakeside buildings I and II.
“Parkway loves the Tempe market,” explains CBRE’s Jim Fijan, who represented the Orlando buyer in its deal with the Seattle seller. “Owning three major class A properties in that submarket was important to them.” Thanks to this acquisition, Parkway Properties owns more than 750,000 square feet in downtown Temple, meaning it has control of 52.8% of the class A office space in that submarket.
Fijan is familiar with Tempe Gateway office, which is located at 222 S. Mill Ave. Developed by Opus West Corp., the building came online in 2009, the same year during which U.S. Bank foreclosed on the developer. The bank turned around and hired Fijan to market the shell building, with Vulcan Inc. claiming ownership rights.
Fast-forward about three years. Fijan tells GlobeSt.com that Vulcan hadn’t really considered selling Tempe Gateway, which was 74% leased at closing, but it was open to offers. “Vulcan was focused on selling its Amazon campus in Seattle, and that was a substantial deal,” Fijan notes. “That took precedent over just about anything else, but as that deal was firmed up, it provided the opportunity for discussion, and to see if we could encourage an off-market offer.”
Fijan goes on to say that Parkway is seeking out class A core assets and that, right now, Tempe is more or less tapped out as a buying destination. The company does have plans, however, to build a 300,000-square-foot office building, Hayden Ferry Lakeside III and is looking for tenants.
As such, “this was a pretty unique deal,” Fijan observes. “Sellers do have a pretty good idea of what they’d like to get in this market. Sometimes a buyer of Parkway’s stature comes along, one with a great track record for performing. In those situations, we do see sellers from time to time entertaining unsolicited offers.”