Bank of America-Leased Campus Sells for $44M in Phoenix

This transaction reportedly was the largest office sale in the market so far this year.

Sky Harbor Center
Sky Harbor Center comprises five office buildings. Image courtesy of Cushman & Wakefield

A private investor has paid $44.3 million for the leasehold interest in Sky Harbor Center, a recently renovated, 534,849-square-foot office campus in Phoenix. The buyer financed the purchase with a $43.6 million loan from Zions Bank, public records show. Cushman & Wakefield arranged the sale, reportedly the largest office transaction by square footage in metro Phoenix so far this year.

The buyer was Mark Heymann, of Dallas, and the seller was Link Logistics, according to CommercialEdge information. The latter had acquired the Class B asset from KBS Realty Advisors in December 2012 as part of a $242.5 million portfolio deal.

Bank of America is Sky Harbor Center’s sole tenant. The banking institution has occupied the entire property since 1989.

A Class B office campus in Phoenix

Sky Harbor Center came online in 1989 and is subject to a 65-year unsubordinated net ground lease held by the City of Phoenix, CommercialEdge data shows. The lease expires in June 2053.

In addition to five office buildings of two or three stories, the approximately 37-acre campus at 1825 E. Buckeye Road includes a parking garage. Amenities include a fully renovated café, coffee/juice bar and conference center, as well as outdoor areas for seating and events.

Cushman & Wakefield’s Steve Lindley and Alexandra Loye represented the seller in the transaction, in cooperation with Will Strong and Molly Hunt of the firm’s National Industrial Advisory Group – Mountain West and Eric Wichterman and Mike Coover with the firm’s Private Capital Group. In addition, Jerry Roberts and Pat Boyle provided leasing advisory.

Careful growth

Lindley said in a prepared statement that office properties are selling again as price discovery emerges and lenders slowly return to the market, but buyers pursue mostly office assets that have credit tenancy, a strong location and appealing on-site or nearby amenities.

The metro Phoenix office market has been holding steady as a Sun Belt leader in deal volume, according to a recent CommercialEdge report. The Valley witnessed $349 million in office sales year-to-date as of April, ranking third after the Bay Area ($469 million) and Dallas-Fort Worth ($357 million).

At the end of May, Younan Properties bought 3200 Central, a 25-story, 350,000-square-foot office tower in Phoenix, from DPC Cos. for $24.5 million. Newmark brokered the deal that closed for half of what the building had sold for in 2016.

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