Office Buildings in Midtown Phoenix Draw New Tenants

Jul. 23, 2006 12:00 AM


Residential Historic Phoenix homes in the central Phoenix area and commercial Historic Phoenix properties are more popular today than ever. Even the small time investors are eyeing the downtown Phoenix areas as places to invest their money, along with the big boys.

Midtown Phoenix's office market has limped along since the mid-1990s, when developers and companies started moving to the Valley's suburbs.

Many of the office towers along midtown's Central Avenue have posted some of the highest vacancy rates during the past five years.

But now the area is leading the pack in attracting new tenants.

Almost 500,000 square feet of office space in midtown was filled during the first half of 2006, according to real estate brokerage Cushman & Wakefield. That's more than anywhere in metropolitan Phoenix.

Mike Beall, senior director with Cushman & Wakefield, said big companies and public agencies are filling midtown's high-rises now.

The Arizona Department of Environmental Quality's lease for almost 100,000 square feet of space in the 4000 N. Central building helped put midtown's office market on top.

Still, the area's vacancy rate is high at almost 14 percent. Metro Phoenix's overall office vacancy rate is 12.5 percent. Downtown Phoenix has one of the lowest vacancy rates at 6 percent.

Real Estate Brokers say many of the firms moving to midtown are enticed partly by light rail, which is supposed to be done by December 2008. Hopefully, construction of the tracks for the trains between now and then won't dampen their enthusiasm for the area.


'Moderate' downturn

National real estate consulting firm Robert Charles Lesser & Co. polled clients and friends to get their take on the housing market.

The results are in: Most people believe the market is in a "moderate" downturn that will last for the next year. The downturn is more in the number of home sales than price drops, and the suburban condominium market is slowing the most. The majority of those polled also believe the housing market will rebound in the next two years.


Record apartment sale

Last year it was homes. Now apartment prices are soaring.

A northwest Phoenix apartment complex recently sold for a record $81 million. That's the priciest apartment deal in the Valley's history.

The Bacara & Montelena complex at The Canyons was purchased by SJ Management of Seattle. Gray Development built and sold the 629-unit complex on the southeastern corner of Interstate 17 and Loop 101.

The deal breaks down to $128,776 an apartment.

The previous record deal was for the $79.6 million. An investor paid that for the La Privada complex in Scottsdale in November.

David Fogler and Steven Nicoluzakis of Grubb & Ellis/BRE negotiated the deal for the Bacara complex.


Catherine Reagor is Senior Real Estate Reporter. Contact her at catherine.reagor@arizonarepublic.com

If you ar looking to invest in an apartment building, whether it's small or large, call Laura Boyajian (Laura B.) today at 602.400.0008. She is a hard care investor in multi-family properties and can help you with your investments too.

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Historic Phoenix Homes Information: Office Buildings in Midtown Phoenix Draw New Tenants