Roughly one year after the opening of Grand2 at Papago Park Center in Tempe, Ariz., Lincoln Property Co. has sold the premier office building to Apex Capital Investments for a reported $187.5 million. The change in ownership of the approximately 358,000-square-foot building, which is fully leased to DoorDash, marks the largest office sale to close in the state of Arizona this year.
Carrying the address of 1033 W. Roosevelt Way within the 60-acre The Grand at Papago Park Center mixed-use development, Grand2 reached completion in October 2019 as a project of LPC Desert West, the southwest regional division of LPC, and Goldman Sachs MBD Real Estate. By the close of 2019, DoorDash had staked a claim to the entire nine-story building under a 15-year, triple net lease and committed to investing approximately $23 million in tenant improvements. LPC considered its job done. “We first brought this property to market in February  but then COVID-19 hit, and the world went on pause,” David Krumwiede, senior executive vice president with Lincoln Property Co., told Commercial Property Executive. “We rekindled the listing several months ago and found that global interest in the asset had not changed. Investors were attracted to the quality of the building, the outlook for our market and the strength of the tenant, DoorDash, which is experiencing exponential growth.”
The Davis-designed Grand2, a striking sight in floor-to-ceiling Viracon vision glass, boasts a host of additional features that provide investors with a certain comfort level for the long term, including a luxurious amenities package highlighted by a rooftop lounge, pandemic-friendly destination dispatch elevators and two on-site Light Rail stops.
Apex, which counts Grand2 as its first acquisition in Arizona, represented itself in the transaction, while LPC relied on Newmark’s CJ Osbrink, Kevin Shannon, Ken White, Brunson Howard, Paul Jones and Rick Stumm. The Newmark team is the same group that orchestrated LPC’s $90 million sale of the 213,000-square-foot Grand1 in December 2019.
Building and selling
LPC has already commenced work on Grand3—the third of what will ultimately be eight office buildings at The Grand at Papago Park Center—which will deliver 280,000 square feet to the market in 2021. “Our model is to develop well-located, highly amenitized projects that attract corporate-level tenants, as was the case with Grand2,” Krumwiede noted. “We are always in a cycle of building, leasing and positioning to sell.”
The build-and-sell strategy extends beyond the office sector for LPC, which has developed more than 128 million square feet of office, industrial and retail projects, and 209,000 multifamily units since its inception in 1965. Looking ahead to 2021, the company’s sales activity may undergo a shift in focus. “If I had to single out a product type prime for disposition, it would be industrial,” Krumwiede said. “All of the dollars chasing multi-tenant office, hospitality, retail and assisted living have piled into the industrial sector, followed by multifamily and single-tenant office. But of these three, demand for leased industrial space is beyond high.”