Scottsdale's vacant Kierland One office building sold for $29.3 million
Kierland One — a 175,441-square-foot lender-owned office building in north Scottsdale that has been empty for the past 2.5 years — was recently sold to a joint-venture partnership between Hines and Pacific Coast Capital Partners LLC for $29.3 million, according to recent statements from Hines and the Phoenix office of CBRE.
The sales price equated to $167 per square foot, which according to LoopNet, is more than double the Valleywide average of $71.32 per square foot as of June.
The last time Kierland One switched hands was just before the Great Recession hit in 2007 for $53.3 million, or about $303 per square foot.
An entity formed by Massachusetts Mutual Life Insurance Co., which foreclosed on the building in 2011, was the seller.
Kierland One is a high-end four-story office building situated on 11 acres across from The Promenade shopping center near Bell and Scottsdale roads.
“We received a great deal of interest from both local and national investors looking for a Class A office property in a one-of-a-kind, Scottsdale location,” Barry Gabel, a broker with CBRE who helped represent Cornerstone Real Estate Advisors LLC, the special servicer, said in the statement. “With 40 property tours and more than 25 offers, Kierland One is a testament to the recovering investment market in metro Phoenix,” said Gabel.
Kierland One was built in 1999 as a build-to-suit for insurance provider Prudential. Although the insurer had a 10-year lease there, it slowly began migrating to another nearby facility that it owned outright and thus subleased its space at Kierland One to major users such as home builder DR Horton.
Pacific Life Insurance Co. and KBS Realty Advisors purchased the building in 2007 for $53.3 million. It used $32.28 million worth of financing from Mass Mutual, according to a recent article by the Business Real Estate Weekly of Arizona.
Once Prudential’s master lease expired and its sublessees vacated, Mass Mutual foreclosed on the note in 2011.
Hines and PCCP have been active investors in the Arizona real estate market in the past, but BREW said this is the first time the pair have teamed up.
For instance, Hines owns the 24th At Camelback and 24th At Camelback II, the two office towers at the southwest corner of Camelback Road and 24th Street where companies such as Cole Real Estate Investments Inc. are located.
“Kierland One is a property that we have admired for several years,” Chris Anderson, Hines managing director and head of the firm’s Arizona office, said in the statement. “We pursued it aggressively when the opportunity to purchase the asset became available.”
Kristena Hansen covers residential and commercial real estate.
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