News Summary
JLL Capital Markets has finalized the sale of six Class A office properties in Phoenix, Arizona, for $266 million. The transaction is part of City Office REIT’s portfolio divestment strategy, focusing on prime locations near Sky Harbor International Airport. The sale signifies a shift in the Phoenix commercial real estate market, as demand for upgraded office spaces continues to rise. This follows a trend of increased interest in the region’s real estate, bolstered by projected job growth in construction and economic optimism.
Phoenix – JLL Capital Markets has successfully concluded a significant real estate transaction in Phoenix, Arizona, with the sale of six Class A office properties for a total of $266 million. The properties collectively encompass 1.247 million square feet of prime office space and mark a key move in the real estate strategy of City Office REIT, Inc. (NYSE: CIO), which JLL represented in this sale to Southwest Value Partners.
This transaction signifies the commencement of the divestment of City Office REIT, Inc.’s Phoenix portfolio. The six properties involved in the sale are strategically situated near Sky Harbor International Airport, close to executive housing, and adjacent to major roads including Interstate 10. These locations enhance the attractiveness of the assets to current and potential tenants.
In addition to this sale, the closing of the Pima Center is under consideration, pending the acquisition of essential approvals related to the property’s ground lease. This step indicates ongoing strategies and management efforts associated with the broader portfolio under City Office REIT.
The transaction was facilitated by a team from JLL Capital Markets, led by Senior Managing Director Ben Geelan, along with Managing Director Will Mast and Senior Director Charlie von Arentschildt. Furthermore, advisory services were provided by Senior Managing Directors Sher Hafeez and Michael Leggett, Director Dan Freese, and Associate Josh Lieberman.
Market Dynamics and Trends
The Phoenix commercial real estate market is witnessing a noteworthy shift in demand favoring upgraded Class A office spaces. This trend affects not only leasing dynamics but also tenant improvement projects, driving demand for higher-quality facilities in the region.
Supporting this upward trend, the construction sector in Arizona is projected to lead job growth across all industries, with a forecasted increase of 3.3% expected in the second quarter of 2025. This optimistic outlook provides a promising backdrop for real estate developments and investments in the area.
While material pricing in the construction industry is stabilizing, upward pressure persists due to tariffs on Chinese imports, particularly affecting electrical components and various construction materials. Recent geopolitical tensions and changes in trade policy have introduced uncertainty into the construction supply chain, influencing product availability and delivery timelines. These factors add complexity to the real estate landscape as developers navigate market conditions.
Other indications of market activity in the region include a recent transaction facilitated by Cushman & Wakefield, which orchestrated the sale of a Class A office building, Forty6Forty5, for $10 million. This transaction underscores ongoing investment interest and the viability of the Phoenix office market.
Conclusion
As the commercial real estate sector in Phoenix continues to evolve, investors and stakeholders are closely monitoring trends and transactions such as the recent $266 million sale of six Class A office properties. The strategic locations and quality of these assets position them well in a market increasingly leaning toward upgraded options amidst a backdrop of economic growth and shifts in the construction industry.
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Additional Resources
- JLL News: Largest Phoenix Office Transaction of 2024 Closes
- Encyclopedia Britannica: Phoenix
- REBusiness Online: Cushman & Wakefield Negotiates Sale in Phoenix
- Google Search: Phoenix Office Market
- AZ Big Media: Phoenix Office Market Insights
- Google Scholar: Phoenix Commercial Real Estate
Author: STAFF HERE PHOENIX WRITER
PHOENIX STAFF WRITER The PHOENIX STAFF WRITER represents the experienced team at HEREPhoenix.com, your go-to source for actionable local news and information in Phoenix, Maricopa County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Waste Management Phoenix Open, Cactus League Spring Training, and Arizona State Fair. Our coverage extends to key organizations like the Greater Phoenix Chamber of Commerce and Visit Phoenix, plus leading businesses in technology and healthcare that power the local economy such as Intel and Banner Health. As part of the broader HERE network, including HERETucson.com, we provide comprehensive, credible insights into Arizona's dynamic landscape.
