Sumitomo Corp. of Americas Eyes Phoenix for Major Expansion
- Dec 06, 2019
Calling Phoenix a city with tremendous growth capacity, Sumitomo Corp. of Americas has acquired the Collier Center, a 2.8-acre mixed-use complex in the city’s downtown that features a 24-story building with nearly 600,000 square feet of space including Class A office, restaurants and retail. The purchase follows the February acquisition of the 31-story SPS Tower in Minneapolis for $144 million.
Eastdil Secured brokered the deal for an undisclosed amount. SCOA did not release the name of the seller, but a Yardi Matrix report identified the previous owner as State Street, a global financial services firm. The property is subject to a 53-year unsubordinated net ground lease held by the City of Phoenix that expires in November 2060, according to Yardi Matrix data.
Transwestern is the property manager. In May, SCOA chose Transwestern to handle property management services for its portfolio, which at the time comprised 3.1 million square feet of Class A office space and was valued at $800 million. In addition to SPS Tower, the buildings consist of 203 N. LaSalle in Chicago, Miami Tower, Atlanta Financial Center and 450 B St. in San Diego. The deal also included any future SCOA properties. This new acquisition expands SCOA’s commercial real estate portfolio to more than $425 million and totaling 1.6 million square feet. SCOA noted it plans to continue its investment strategy targeting high-potential growth areas like Phoenix, Seattle, Denver and Austin, Texas.
Collier Center profile
Collier Center, located at 201 East Washington St. in the CBD, was at 84 percent occupancy at the time of the acquisition. Office tenants include Uber, Gensler, U.S. Trust and Navigant. Among the restaurants are The Whining Pig, Taco Bell Cantina, Fired Pie, Mancuso’s Restaurant and Hard Rock Café. Retail includes FedEx and Perry Monge Salon. The property also has a three-level underground parking garage with more than 1,500 parking spaces. The transit-oriented property is within walking distance of the city’s light rail trains and bus lines. It is also minutes from major highways.
Growing economy, market
Yurika Sugimoto, manager in SCOA’s commercial real estate unit, said in prepared remarks that the firm viewed Phoenix as a city with growth potential. The firm noted Phoenix is an economic hub in the Southwest U.S. with unemployment rates that have been steadily dropping with a surge of new job opportunities. The city is also home to Arizona State University, which contributes to Phoenix’s economy and produces high-quality labor. The third-quarter Phoenix Office Market report from Yardi Matrix noted that Phoenix has remained one of the fastest-growing economies in the country, gaining 68,400 jobs in the 12 months ending in June. The unemployment rate was 4.8 percent in July, 110 basis points above the national rate of 3.7 percent due to significant population growth and people re-entering the workforce. Office-using jobs comprised 27.8 percent of Phoenix’s employment market. As of late July, about 3.7 million square feet of new office space was under construction, most of it speculative, according to the report.