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PHOENIX-As part of its plan for 28 acres of periphery retail at the 1.3-million-sf Metrocenter Mall, Highland Development Co. has sold two buildings, totaling 40,310 sf, to Sun Life Financial for $7.75 million. The seller is 80% finished with the 375,000-sf redevelopment, which began in 2005.

Sun Life’s buildings are situated on 3.7 acres at 10217 N. Metro Pkwy., two of 16 structures undergoing a $4-million renovation by the San Mateo, CA-based seller. The just-sold structures are 100% occupied by Alltel, Regency Beauty, Jason’s Deli and Shoe Pavilion.

After selling 11 retooled buildings, Highland is down to five structures and two pad-site developments to finish off the makeover of the 12-year-old space. “We’re leasing everything up before we sell,” Greg Hoxworth, Highland Development’s president, tells GlobeSt.com. “With changes in the financing market, everything has to be leased these days before selling.”

The Wellesley, MA-based Sun Life had Deborah Tirone, senior director of real estate, negotiating its terms. The seller’s team was Capital Pacific of San Francisco.

Bret Williams and Brian Ward with Retail Brokers Inc. in Scottsdale are marketing and leasing the remaining space. Highland Development has a 14,000-sf building, which is half leased to Men’s Wearhouse, and a vacant 20,000-sf building to fill before putting them on the market. The quoted rate is $18 per sf gross. Up for sale is a 50,000-sf building, housing 24-Hour Fitness Center. It is being marketed for $12.9 million, with a 5.5% cap rate. Meanwhile, construction is underway on a Chili’s Bar & Grill for one pad site and the other one, once holding a What-A-Burger restaurant, is up for sale. Chili’s will open in May.

Hoxworth and Highland’s development manager Peter Quies says the financial markets–as well as the permitting process due to an explosion of activity–in the area have slowed the company’s estimated timeline for completing the project. Quies predicts the last buildings will be on the market by mid-2008.

With completion on the horizon, Hoxworth says Highland Development would like to do more projects in the area. “We’re continuing to look there for projects and are even discussing opening an office there sometime next year,” he says.

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