Summary: BKM acquired Ash Business Center, a 89,728 square foot asset that includes 9 buildings and 15 suites. Located at the corner of the I-60 Freeway and Baseline Road (a major thoroughfare) and within a mile of Downtown Tempe and Arizona State University, the asset is well positioned in the Tempe, Arizona market.
Value Add Goals: This property is 96% leased today, however the rents are significantly under market at $0.74 G, compared to $0.86 G in the competitive set currently, and $1.10 G at the peak of the economy. The previous owner lowered rates to attract tenants but has done minimal property maintenance leaving room for cosmetic improvements that could add value. Built in 1986, there is an opportunity to modernize this asset with improved landscaping, paint scheme, monument signage and reintroduce the property to the market at rental rates consistent with the competitive set and representative of current demand.
The city of Tempe is located just east of Sky Harbor International Airport, south of Scottsdale, west of Mesa and north of Chandler. As one of the metropolitan area’s most prominent cultural and employment centers, Tempe has over 160,000 residents and is home to Arizona State University, the nation’s largest university by enrollment with over 70,000 students and 11,000 employees. ASU’s economic impact is estimated to equal $4 billion, making it one of the state’s most important economic engines in terms of workforce education, cultural contributions, and commercial development. The city crossed by the Loop-101 and Loop-202, two of the greater Phoenix area’s most developed arterial freeways.
Tempe provides one of the nation’s most well-educated labor pools, with 40% of residents earning a Bachelor’s Degree or higher. The city is also home to the state’s largest concentration of technology firms; this list includes Medtronic, Microsoft, GoDaddy, Insight Enterprise (a Fortune 500 company), and more. Approximately 20% of Tempe’s employment is in the technology sector and over 500 local companies are considered tech firms, giving the area its “Silicon Desert” reputation. The largest employers in Tempe are Arizona State University, Maricopa Community Colleges, Safeway Inc., SRP, Wells Fargo, Honeywell, US Airways, and Freescale Semiconductor. Unsurprisingly, Tempe is experiencing 2.7% annual employment growth, double that of the nation. Housing and construction starts are also growing rapidly, up 140% over market lows, and 7,200 apartment units are under construction, with 10,000 more in the planning process.
Tempe is known for its college-town personality and 24/7 entertainment, shopping, dining, and park amenities in locations such as the Mill Avenue District, a nightlife destination for the entire Phoenix area. Tempe is also home to the Sun Devil Stadium and the Fiesta Bowl Block Party, one of the nation’s largest New Year’s Eve celebrations and sporting events. The city offers a live-work-play combination that has created significant inflow of office, retail, and residential developments including the construction of 3.400 multi-family residential units and a 2-million-square-foot State Farm Insurance corporate campus.