Seller Reaps $38M From Class A Office Trade

Alliance Commercial beat 19 other offers with an aggressive bid and hard earnest money, citing a hot market and upside potential for the 3636 Central Ave. property. The San Diego-based Equastone had acquired the 20-year-old building when the city's occupancy rate was 30% and rents hovered $14 per sf. Not only did Equastone invest several millions of dollars to improve the common areas, but it also bought land right next door to enlarge the parking lot.

Rob Rizzi, partner and executive vice president with Broadstreet Advisors LLC of New York City says "the market took off" as the building's occupancy moved toward stabilization. His firm advised Equastone and secured the buyer.

The building, now 85% occupied, has a "good, solid tenant base in there," Rizzi tells GlobeSt.com. "But there's still a good amount of upside in the property, with below-market rents."

The upside is what prompted Alliance, represented by Phil Marino of Intercon West Realty Advisors LLC, to make its aggressive offer. "Rents are continuing to be pushed up, led by what's going on at 24th and Camelback," says Rick Stone, Alliance's CEO. "We think there's still a delta to increase rents." Minimal improvements might be made to the building under the new owner's watch, but he stresses that "Equastone has done a great job with it so we're not planning anything major."

David Bourne, Equastone's chairman, says the company never planned a long-term hold for the building, adding Security Title Plaza sale fit within acceptable investment parameters. "In the structure of our fund, there's a strong motivation to buy, fix, lease and sell," he adds. "This one was about on schedule as we normally project a two- to four-year hold."

Formerly known as Columbus One Plaza, the building is home to tenants like Security Title Agency and the law firm of Shughart Thomson & Kilroy. The building's name was changed in 2005 when Security Title signed a long-term, 42,827-sf lease.