MicroAge Bankruptcy Drives $8.5-Mil Building Sale

TEMPE, AZ-A 150,000-sf office building of a technology company thrust into bankruptcy has been bought for $8.5 million by a Tucson-based real estate investment company.

The privately owned HSL Properties Inc. has the taken the keys to MicroAge’s three-story office building in a sale that equates to $56.66 per sf. The office building is located at 1330 W. Southern Ave. on the northeast corner of Southern Avenue and Priest Drive. It’s less than a half mile from the Superstition Freeway and Interstate 10.

The price was so far below replacement costs, Humberto Lopez, president of HSL Properties tells GlobeSt.com, that it seems like a good investment even with a slowdown in demand for office space. “I thought it was a hell of a deal,” he says. “I can move someone in for very few dollars. I can be very competitive.”

MicroAge never occupied the bulk of the fiber optics-wired building so there is no reconfiguration required. The building was completed just as MircoAge hit hard times and was forced to cut production and staff. MicroAge had been one of the Valley’s largest employers and a rising star, but has been forced to sell assets as part of its bankruptcy proceedings.

A number of tenants have already shown interest in leasing portions of the building, Lopez says. One user is talking about taking 100,000 sf.

Those tenants who are looking for office space these days are interested in larger floor plates, Mark Seale, a broker in the Phoenix office of CB Richard Ellis who is listing the property, tells GlobeSt.com. “We’ve been pleased with the activity,” Seale says. “The demand that we’ve seen have been in the 25,000 and higher floor plates.” The office building has 50,000-sf floor plates.

The building’s location near Arizona State University also is a plus for tenants needing that kind of labor pool, says Seale. Also a bonus are the nearby amenities of Arizona Mills, situated just a mile south on Priest Drive. He says HSL Properties got such a good price that it can be offered at very competitive prices even though tenants today are in control of the marketplace. The quoted rate is $13 per sf triple net, which is competitive with back-office rates, Seale says.

HSL Properties has a mixed bag of properties in its portfolio. It owns more than 5,000 apartment units in Tucson, four hotels in southern Arizona and land in Tucson and Southern California, and more than 125,000 sf in several Tucson office buildings. Earlier this year, the company sold a Phoenix apartment complex.

The Phoenix office of CB Richard Ellis, with brokers Warren Johnston, Kit Tiedemann and Check Nixon, assisted MicroAge in the sale, while HSL Properties represented itself. Seale, Johnston and Mark Bauer, also of CB Richard Ellis, are the property’s listing agents.