“Nearly all men can stand adversity, but if you want to test a man’s character, give him power”
Kristena Hansen Reporter- Phoenix Business Journal – UPDATED: Jun 27, 2013, 3:19pm MST
If you’ve driven through downtown Tempe recently, you may have noticed some construction activity commencing at the now-fenced off northeast corner of Mill Avenue and Rio Salado Parkway.
Well, you were witnessing the infant stages of the third and final office tower at the Hayden Ferry Lakeside development.
Orlando-based Parkway Properties Inc. (NYSE: PKY), which finished acquiring the entire Hayden Ferry project last year, is now ramping up construction of the $100 million tower in hopes of wrapping up sometime in 2015, Matt Mooney, the firm’s local spokesman, told me this afternoon.
Blueprints call for 260,000 square feet of Class A office space that will stand at 10 stories, making it the second largest of the soon-to-be Hayden Ferry trio. Hayden Ferry I is about 205,000 square feet and eight stories tall, while Hayden Ferry II stands at 12 stories and 300,000 square feet. Both existing towers are almost fully leased and include tenants such as Silicon Valley Bank, KPMG and Microsoft.
Ryan Cos. is the general contractor for the third tower.
No pre-leases have been signed thus far, but because development in the downtown Tempe submarket has been catching fire lately, Parkway thinks it’ll be unlikely the tower will be built as a spec, Mooney said.
“We are not at the point in the design process where we have to make that decision yet, and based on the incredible interest we have in the project today, we don’t anticipate it being a spec versus pre-lease decision,” he said. “The demand is already there to allow us to push toward an early 2015 delivery.”
Parkway, a real estate investment trust, began gradually taking over the Hayden Ferry project, which sits on the south side of Tempe Town Lake, in mid-2011 with the $40 million purchase of Hayden Ferry I. That transaction also included the land, which had previously been owned by the city until its eight-year Government Property Lease Excise Tax incentive expired the year prior.
Early last year, Parkway acquired Hayden Ferry II for $86 million. That parcel’s GPLET, however, is still active and thus is owned by the city; the land will transfer over to Parkway ownership once the incentive expires.
Then in September, Parkway purchased the 3.5-acre parcel slated for tower III from Scottsdale-based Sunbelt Holdings Inc. for $3.5 million. In a separate transaction, the REIT also acquired the adjacent parking garage for $12.7 million.
Parkway has been one of the most active buyers of downtown Tempe office space recently, investing more than $250 million in the submarket thus far.
Earlier this year, it took over 75 percent ownership interest in the US Airways headquarters building, located catty corner from Hayden Ferry on the southwest corner of Mill and Rio Salado for about $42 million.
It also paid another $66.1 million in January for the nearly 264,000-square-foot Tempe Gateway office building, which is next to the US Airways facility along Mill Avenue.
Kristena Hansen covers residential and commercial real estate.
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Walter Unger CCIM, CCSS, CCLS
I am a successful Commercial Investment Real Estate Broker in Arizona now for 15 years and I worked with banks and their commercial REO properties for 3 years. I am also a commercial and Landspecialist in Phoenix and a Landspecialist in Arizona.
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