PHOENIX (By Glen Creno,
Arizona Republic) October 10, 2006 — Chase Tower, the glossy Phoenix
high-rise that is the state's tallest building, has been sold to
Canadian investors for more than $103 million.The deal was part of a $460 million sale of the banking giant's real estate holdings in 10 U.S. cities.
JPMorgan Chase & Co. sold the 40-story, glass-enclosed building at 201 N. Central Ave. to a real estate fund run by Brookfield Asset Management of Toronto. Chase occupies and will continue to occupy about 80 percent of the building's 750,000 square feet.
Calmetta Coleman, a spokeswoman for the bank in Chicago, said her company wasn't commenting in detail about the sale of 33 properties and banking centers across the country. As in Phoenix, Chase will lease and continue to occupy the buildings it sold.
"Real estate is not our primary business," she said. "We thought these were properties that would be attractive to investors."
Brookfield issued a written statement saying leaseback deals with Chase around the country will provide a steady stream of revenue.
Coleman said Chase signed a lease for at least 10 years in Phoenix, though she didn't have the specific number.
David Arthur, Brookfield's president and chief executive, said the company will try to make better use of space it sees as not productive, try to wring the most out of new leases, and control expenses.
"We believe we are well-positioned to create value by proactively asset-managing the portfolio," he said.
Downtown Phoenix has been a bright spot for the Valley office market. The Valley's overall office vacancy stood at 12.8 percent in the third quarter, according to Cushman & Wakefield's latest numbers. But the brokerage also noted that the downtown vacancy rate was half of that, at 6 percent, indicating strong demand in a city center that is benefiting from the buzz created by Arizona State University's new downtown campus, the light-rail project and bioscience business.
The Chase Tower sale comes close to the $107 million paid for the Hines building near 24th Street and Camelback Road in a deal that closed in December and falls short of the record $155 million paid for two buildings in the Camelback Esplanade last year.
But the Hines building, at eight stories and 303,000 square feet, brought about $350 a square foot because it is newer and is part of a select pool of office space around 24th and Camelback, an elite office address in Phoenix. The Chase building fetched about $135 a foot.
Charles Miscio, an office broker at CB Richard Ellis, characterized the Phoenix Chase building as a "coupon-clipper" that will guarantee its owners a stable long-term lease with a major tenant.
But he also said that the arrangement doesn't allow for a lot of leasing opportunities.
The pool of downtown office space will grow if such new projects as the $900 million CityScape mixed-used development is built.
Jay Hoselton, an office broker with Cushman, said the office market will be fine as long as the region keeps creating jobs.
"It's a strong market down there," he said of the downtown area. "It's a landlord's market."
