In the News—Week of August 5, 2024
Deal of the Week
NEG Property Services, an entity based in Florida recently acquired an Arby’s restaurant in Tempe, Arizona for $1,510,000 with a cap rate of 5.30%. The was no debt recorded on this purchase. This transaction was handled by Joel Montemayor, Senior Commercial Escrow Officer in our Scottsdale office.
National
Los Angeles County mulling $215M offer in cash for Gas Company Tower
Los Angeles County is considering an all-cash offer of $215 million for the Gas Company Tower, significantly below its estimated value from three years ago, Commercial Observer reports. The potential acquisition is part of the county’s exploration of alternatives to costly seismic retrofitting for its downtown properties. The property was estimated to have a value of $632 million in 2021. The deal would be exempt from Measure ULA, a tax on high-value commercial properties, and could affect the city’s plans to lease a significant portion of the tower. Both JLL and Savills, involved in the transaction, declined to comment, and it remains uncertain how this sale would impact the building’s occupancy rate.
National
Assessed value of office buildings fall in King County as residential rises
The assessed value of office buildings in downtown Seattle has significantly dropped due to the rise of remote work, with projections indicating steeper declines by 2025, KUOW reports. This has given tenants more leverage in lease negotiations, forcing landlords to meet their demands to avoid vacancies. Residential property values in King County, especially on the east side of Lake Washington, are rising and will partially compensate for the drop in commercial property tax revenue.
National
New York City office building sells for below 3% of its price in 2006
A Midtown office building, 135 W. 50th St., was sold for $8.5 million, a sharp drop from its 2006 purchase price of $332 million, the New York Post reports. The almost 1-million-square-foot building, which houses the Urban Hawker Singapore-style market, was auctioned off after remote work significantly impacted its value, leaving it 65% vacant. Despite its prime location near Radio City, the building’s mid-block address, low ceilings and other challenges made it less appealing. The sale did not include the land, which had been sold separately in 2019 for $285 million.
National
With GM leaving for another HQ, Ren Center faces possible demolition
The Renaissance Center office complex in Detroit, long occupied by General Motors, is facing potential partial demolition as GM plans to move to a new location in downtown Detroit, CD Recycling reports. This proposal, driven by high vacancy rates, is being discussed with architects and developers, including potential involvement from Dan Gilbert’s development firm, Bedrock. The demolition could yield significant recyclable materials like steel and concrete. The Mayor’s office is considering all options for the site, aiming to avoid prolonged vacancies seen in other historic buildings in Detroit.
Arizona
Phoenix metro area leads the nation in industrial space under construction
The Phoenix metro area leads the U.S. in active industrial development, AZ Big Media reports. Figures from LGE Design Build’s Q3 Construction Delivery Outlook show 37 million square feet of projects underway in the Phoenix area. Rental rates have reached a record $1.15 per square foot. The area has seen stabilization in material prices and an increase in construction jobs, despite supply chain challenges. Major developments by companies like Taiwan Semiconductor Manufacturing Company and Intel are expected to create over 20,000 jobs, further boosting demand for industrial and office space.
Arizona
Gilbert, Scottsdale ranked among best cities in nation for renters
Scottsdale and Gilbert are among the top cities nationally for renters, AZ Big Media reports. Rankings from Rent Cafe place Scottsdale fifth and Gilbert ninth. The site weighed economic strength, apartment quality and natural amenities. The Phoenix metro area is noted for its thriving local economy and lower cost of living compared to other Western metros. The report mentioned Charleston, Atlanta and Sarasota, Florida, as leading metro areas for renters.
