Brokers for CB Richard Ellis in Phoenix are representing theseller. They confirmed that the 1 N. Central Ave. high rise isunder contract, but declined to provide any additional details. Theprospective buyer's identity couldn't be determined by press time.Sumitomo, which owns multifamily properties in the region, acquiredits only office building in the metro from Minneapolis-based RyanCos.

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Charles Miscio, senior vice president for ColliersInternational's Phoenix office, says the New York City-based sellermost likely placed Phelps Dodge Tower on the sales block because ofbrisk trading in recent months of CBD office buildings. "They'dbought the asset for around $201 per sf and have been seeing recenttrades of more than $300 per sf for similar assets," says Miscio,who was with CBRE's Phoenix office and involved in last summer'stalks with Sumitomo started to consider the sale. "I think they'dtracked the Collier Center sale and realized they had two large,long-term leases in place in their assets with limited rollover anda strong institutional market out there for a trophy core asset anddecided to test the waters to see what would happen," he says."This is sheer profiteering and I can't say I blame them."

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Miscio tells GlobeSt.com that Sumitomo also had strongprecedence for putting its asset on the market. Collier Center at201 E. Washington St. sold in July 2007 for $177 million, workingout to roughly $345 per sf. More recently, Hines has bought the965,508-sf One and Two Renaissance Square at 2 N. and 40 N. CentralAve. for $270.9 million or about $280 per sf.

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Miscio says that huge upside in the rents is driving the sales.Once the leases roll, he notes, CBD rents, which are currently inthe high $20s per sf, can be pushed as high as 20%.

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Though Miscio doesn't know Phelps Dodge Tower's buyer, hewouldn't be surprised if the hold ended up long term. "This is nota value-add play, and it's not like half of the building is rollingout," he comments. "But the longer the leases that are in place,the more advantageous it is to the buyer, who can watch and dictatewhere the market is headed."

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