Brokers for CB Richard Ellis in Phoenix are representing the seller. They confirmed that the 1 N. Central Ave. high rise is under contract, but declined to provide any additional details. The prospective buyer's identity couldn't be determined by press time. Sumitomo, which owns multifamily properties in the region, acquired its only office building in the metro from Minneapolis-based Ryan Cos.

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

Miscio tells GlobeSt.com that Sumitomo also had strong precedence for putting its asset on the market. Collier Center at 201 E. Washington St. sold in July 2007 for $177 million, working out to roughly $345 per sf. More recently, Hines has bought the 965,508-sf One and Two Renaissance Square at 2 N. and 40 N. Central Ave. for $270.9 million or about $280 per sf.

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

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