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PHOENIX-Austin, TX-based Falcon Southwest Development Co. has made its first office acquisition in the Valley by purchasing Camelback Arboleda for $17 million from Scottsdale Investment Management LLC. The 178,948-sf complex, located at 1661 E. Camelback Rd., is 30% vacant.

“Falcon was looking for value-added office investments,” says Don Arones of Grubb & Ellis/BRE Commercial LLC tells GlobeSt.com about the off-market transaction. “I have known the guys [at Scottsdale Investment Management] for years and I knew that they were thinking about selling.” The locally based investment company purchased the complex in 1999 for a reported $20 million.

According to Arones, the complex’s lead tenant, American Express Co., had vacated the building. “When a major tenant leaves…there just wasn’t enough value in it to go through lease up,” he says, referring to Scottsdale Investment Management’s decision to sell. “They plan to deploy their capital in other assets,” he explains.

Built in 1982, the class B-plus complex boasts large floor plates and a four-level parking garage, says Arones, who brokered the deal along with partner Thomas Jacobs. Falcon Southwest will invest more than $1 million to update the complex’s common areas such as lobbies and elevators. Moreover, the company plans to create speculative suites in the complex. Falcon Southwest, which spent $15 million in the fall for the Northern Greens apartment complex in Phoenix, put new financing on the office acquisition in a plan for a three-to-five-year hold, according to Arones.

The rental rate for Camelback Arboleda is $21.50 per sf, full service. Jacobs and Grubb & Ellis/BRE broker Justin Miller will handle the leasing for the project.

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