KBS' $30M High Offer Ropes Scottsdale Financial Center III

SCOTTSDALE, AZ-KBS Realty Advisors has met the $30-million asking price to buy its 150,638-sf CBD neighbor, the Scottsdale Financial Center III, from San Francisco-based Aitchison Family Properties.

“It was very competitive situation,” Brian Ackerman, an associate with Cushman & Wakefield of Arizona Inc., “and the buying pool ran the gamut.” The class A Scottsdale Financial Center III is situated on about two acres at 7272 E. Indian School Rd., a sister to KBS’ 105,457-sf Scottsdale Financial Center I at 4110 N. Scottsdale Rd. and the 166,231-sf Scottsdale Financial Center II at 4141 N. Scottsdale Rd.

Ackerman tells GlobeSt.com that it wasn’t surprising that Newport Beach, CA-based KBS Realty Advisors emerged as the winner for Scottsdale Financial Center III. “KBS already owns Scottsdale Financial Center I and they’re very familiar with the submarket,” he says. “KBS thought they were getting a good value for the building.” Ackerman partnered with Chris Toci in C&W’s Phoenix office and J. Russell Sherman and Christopher Aust in C&W’s San Francisco office to broker the acquisition.

Scottsdale Financial Center III’s location in the Scottsdale CBD is particularly attractive to investors, Ackerman says. “There’s about $1.4 billion of investment in the redevelopment of downtown Scottsdale with a lot of new retail and residential development,” he adds. “This definitely benefits the office market and shows that downtown Scottsdale is a place where people want to be.”

The five-story Scottsdale Financial Center III, built in 1985, was 94% leased at closing. The tenant roster includes a mix of small and large tenants ranging from 1,000 sf to 30,000 sf. The lead tenants are Colony Group and Tri-Core Engineering LLC. The quoted rent is $23.50 per sf.

Ackerman says Scottsdale Financial Center III is vulnerable to a bit of rollover for a couple years. However, he contends it’s nothing to worry about. “The occupancy levels for office buildings in downtown Scottsdale are pretty high–there’s pretty good demand,” he says. “We think that the location and the demographics are so great that KBS could backfill the space if tenants left Scottsdale Financial Center III.”