Fully Leased Office Building Fetches $33M

SCOTTSDALE, AZ-Four years after completing a 91,148-sf class A office building, local developer Lees Mayfield & Associates has found a buyer. Falcon Real Estate Investment of San Diego has acquired the 100% leased building for $32.75 million at a 6.1% cap rate.

Bob Young, first vice president for CB Richard Ellis in Phoenix, tells GlobeSt.com that the 7025 N. Scottsdale Rd. building offered strong upside potential, with 25% of the tenants’ leases rolling over within three years. “The rent on it is about 12% below market,” he adds.

Furthermore, lead tenant Waste Management Inc. has about one-third of the building tied up with a lease through December 2012. The second-largest tenant, M&I Bank, rolls over at the same time.

Young points out that Falcon Real Estate ended up with an asset that will provide a good income stream. “This was a quality asset at a good size with no debt on it,” he adds. “A 100% leased building in Scottsdale is a good investment.”

Young says Lees Mayfield’s decision to sell was an easy one due to current market conditions. “Right now there’s a lot of capital chasing good opportunity,” he says.

Falcon beat out several other would-be buyers with its offer and track record. “We’ve done business with them before and they’re an excellent buyer,” Young says. In addition, the buyer was in an exchange and needed to close quickly so that helped as well, he adds.

Working with Young on behalf of the seller were CBRE’s Rick Abraham, Glenn Smigiel, Steve Brabant, Brad Anderson, Luke Walker and Brian Taute. Falcon Real Estate was self-represented.