ViaWest Sheds Biltmore Center in One of Phoenix’s Largest Deal

Article originally posted on Globe St. on January 23, 2020

Phoenix-based joint venture ViaWest Group has sold the iconic Biltmore Center in Phoenix for $212 million. The deal was the largest to close in 2019 and the fourth largest sale in the market’s history. ViaWest sold the property to an unnamed new entity that was formed for the purchase, and it will maintain an ownership and management interest in the property.

ViaWest purchased the property in 2015 for $163.1 million, and executed a traditional value-add strategy. “The seller had acquired Biltmore Center in 2015 at roughly 75% occupancy,” Ben Geelan, director at JLL, tells GlobeSt.com. “Upon acquisition, ownership underwent a significant repositioning plan to create a collaborative environment at the project. The seller then stabilized the asset and brought it to market.” Geelan represented the seller in the deal along with senior managing director Michael Leggett and analyst Nick Ray. JLL Capital Markets senior managing director Jeremy Womack and senior managing director Ed Coco secured a $150.7 million acquisition loan as part of the purchase.

Investors are targeting trophy assets, like the Biltmore Center, in Phoenix, particularly recently renovated properties with lower capital investment requirements. “We are currently seeing significant demand for best-in-class office assets with immediate access to walkable amenities in Phoenix,” says Geelan. “Investors are also very focused on exposure to capital costs throughout their hold period.  Biltmore Center checked all of those boxes; newly renovated and collaborative common areas, “Main & Main” location across from Biltmore Fashion Park, no deferred maintenance, and in-place rents 25% below today’s market.  The Biltmore Center sales process reflected a broad buyer pool of both domestic and foreign capital, all of which are eager to place equity into Phoenix office assets.”

The opportunities that fit this bill are few and far between, particularly in Phoenix. “There are currently few offerings like Biltmore Center in the market right now,” says Geelan. “We do expect a handful of these best-in-class assets to hit the market this year, and would expect significant demand for them.”

The deal is also indicative of the continued growth with Phoenix and continued investor appetite in the market. “The Phoenix investment thesis has continued to gain momentum in the later stages of this cycle,” says Geelan. “We expect that to strengthen throughout 2020.  Growth in many of our peer markets have begun to moderate significantly.  There are no signs of slowing in Phoenix with the rapid population and employment growth.”

Biltmore Center features three office buildings totaling 643,145 square feet on the northwest corner of 24th Street and Camelback Road in Phoenix. It is well-positioned to reap the benefits of the growing area. “At the forefront of this growth is corporate relocation and expansion from higher tax and heavier regulated neighboring states,” says Geelan. “All of that being said, investors are highly focused on exposure to capital costs throughout their hold-period, proximity to walkable amenities, and access to a robust labor pool.  It’s assets like Biltmore Center that check all of those boxes that will continue to garner significant interest from investors.”

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