KBS Sells Phoenix Office Asset for $104M

The Camelback Corridor property saw nearly $23 million in improvements over the last eight years.
Anchor Centre. Image courtesy of KBS

KBS has sold Anchor Centre, a two-building, 333,014-square-foot office property in Phoenix. TerraCap paid $103.5 million for the Class A, recently improved asset. JLL assisted the seller in the current sale and provided acquisition financing from Colony Capital for the buyer. Greenberg Traurig offered legal counsel to KBS.

According to CommercialEdge, KBS had purchased the property in 2014 for $85.1 million through its KBS REIT III, financing the acquisition with a $53.2 million loan from U.S. Bank.

Anchor Centre occupies roughly 7 acres within Phoenix’s Camelback Corridor. Completed in 1984, the six-story building at 2201 E. Camelback Road features 45,000-square-foot floorplates and first-floor retail. The second component is a four-story property built in 1986 at 2231 E. Camelback Road. Amenities include a tenant lounge and game room, fitness center, conference room, plaza area and outdoor patio, as well as a 5,000-square-foot restaurant and bar.

The Energy Star-certified asset was 93.2 percent occupied at the time of sale, the roster including Humana Insurance, Northwestern Mutual and Black & Veatch. Cushman & Wakefield will handle all leasing activity and CBRE will serve as property manager.

The office campus is some 7 miles northeast of downtown Phoenix near Biltmore Center, an office property which traded for $212 million last January. The location is within walking distance of various dining and shopping options, including The Shops at Town & Country and Biltmore Fashion Park.

JLL Director Ben Geelan, Senior Managing Director Michael Leggett and Managing Director Brian Ackerman led the Capital Markets team representing the seller, while Executive Managing Director Kevin MacKenzie and Director Jason Carlos secured acquisition financing for the buyer. Geelan and Ackerman were also involved in the recent sale of another two-building Phoenix office asset.

The Greenberg Traurig team assisting the seller included attorneys Bruce Fischer, Howard Chu and Caroline Pricher, together with paralegal Amanda Kennedy.

Extensive improvements

CommercialEdge shows Anchor Centre underwent cosmetic renovations in 2012, under the previous ownership of Angelo Gordon. After the 2014 purchase, KBS further upgraded the property with a capital improvement program targeting the lobby, common areas and various amenities.

In addition, KBS hired a local architect to create a progressive spec suite program to prepare tenant-ready suites without a committed tenant. According to JLL, the subsequent owners have invested more than $22.9 million into Anchor Centre since 2012.

A healing market

The Phoenix office vacancy rate rose to 16.9 percent in the fourth quarter of 2020 following nearly 1 million square feet of negative absorption, according to a recent Avison Young report.

Even so, the market is faring relatively well when compared to national or historic figures, and the average asking rate was up at $28.82 per square foot, the Avison Young research shows. The Tempe submarket registered the highest average rent through 2020’s last quarter, at $37.41 per square foot.