SCOTTSDALE, AZ—Pillar at Scottsdale, a 539-unit, class-A multifamily property with 539 units located at 17212 North Scottsdale Rd., sold for nearly $96 million or $177,644 per unit. The asset was purchased through Seattle-based Security Properties Multifamily Fund II in its second joint venture with Boston-based Intercontinental Real Estate and its US REIF Fund. It is Fund II's second purchase in the Phoenix market and the 11th asset overall. This is the 89th asset in the Intercontinental Fund.
Davis Vaughn, investment manager/acquisitions with Security Properties tells GlobeSt.com: "We purchased Pillar at Scottsdale because of the A+ location in North Scottsdale, and the unique product type. This was a rare opportunity to buy in Scottsdale, the highest rent submarket of the Phoenix metro, in a location with immediate access to retail amenities and jobs. We were also attracted to the unit mix as nearly 50% of the units are townhome-style and 75% of all units have direct-access garages. There is a significant value-add opportunity to renovate the units as most new construction has a much smaller percentage of these types of units and so we feel the market for them is being underserved. With a basis well below replacement cost and a bulletproof location, we hope to create long-term value for the investors in our Multifamily Fund II."
The subject was built in 1999 and was 96% occupied at the time of sale. The location is across the street from the TPC Scottsdale golf course and the five diamond Fairmont Princess Resort. To the west is the Reach 11 Recreational Preserve which is a 1,500-acre park with 18 miles of hiking trails as well as a large sports complex.
It is located in the Scottsdale Airpark submarket, putting it within a 5-mile radius of 142,000 jobs and some of the Valley’s most notable corporate employers including the Mayo Clinic. The clinic is opening a new $314 million cancer center in 2016 that will create 1,000 new jobs. Adjacent to the Mayo Clinic is the American Express campus with 3,000 jobs. Additional blue-chip companies with large presences in the area include Prudential, Vanguard, JP Morgan Chase, Starwoodand Scottsdale Healthcare.
Pillar at Scottsdale is surrounded by a number of high-end retail, dining and entertainment venues including Kierland Commons and Scottsdale Quarter. These two premier mixed-use developments in North Scottsdale are located just 1 mile from the community with retailers such as the Apple store, the Nike store, Lululemon and Forever 21. Trader Joe's is in the center diagonal to the subject and Whole Foods is less than 1 mile north.
The interiors will be updated and the exterior and amenity space will also be upgraded to be consistent with the new interiors. The end product will be priced below new construction, but be able to offer direct access garages and townhome units that most of the competition does not have, plus a comprehensive amenity package that includes one of the top pool areas in the market, an in-door basketball court and fitness center.
Tyler Anderson, Sean Cunningham, Asher Gunter and Matt Pesch with CBRE’s Phoenix office negotiated the transaction.
