The dwindling amount of vacant office space across the Valley has prompted a Tempe developer to begin marketing a 14-story building along Interstate 10 that’s aimed at attracting a major corporate tenant.
If built, the 384,000 building would join only one or two other speculative office projects to get going in the Valley in the past two years.
Metro Commercial Properties has had city approval to move forward on the project since 2010, when vacancy rates were hovering around 30 percent. While vacancy rates are still high, Metro Chief Financial Officer Tony Hepner said the Valley has begun to run out of high-quality spaces of 100,000 square feet or larger.
“We’re trying to position ourselves for the large corporate user that really can’t find the space they need in the Valley right now,” Hepner said.
Metro is searching for a lead tenant who would occupy at least 100,000 square feet before beginning construction. The developer could scale down the building to just four floors if possible. Hepner said it’s likely the project will wind up being in the mid-range of possible configurations.
The development’s cost could approach $100 million at maximum size.
Called Fountainhead Park Summit, the tower would stand at a high-profile location along I-10’s Broadway Curve. That’s in the Fountainhead Corporate Park, where Metro in 2011 completed a 10-story and a 6-story building leased to the University of Phoenix.
That project and the new building are financed by USAA Real Estate Company. Hepner said USAA doesn’t have to worry about securing financing once enough of the building is pre-leased.
“Our client is well capitalized and they have the money,” he said. “It’s different from other projects that are a pretty picture trying to attract tenants.”
Hepner said Tempe’s office market has recovered faster than expected. The Fountainhead location is especially desirable because freeway access puts it within a quick drive of much of the Valley, Hepner said.
The only other speculative office project in the past two years is a 92,000-square-foot building under construction in Chandler’s Price Corridor. Since the project was announced early this year by the Douglas Allred Company, the building has been leased to Gilbert-based Infusionsoft, Inc.
Also, Sunbelt Holdings and Ryan Companies announced plans this year for a 10-story building at Hayden Ferry Lakeside. The companies anticipate breaking ground by the end of the year if enough pre-leases are signed.
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